More than 50,000 construction firms 'in distress'
According to a firm of insolvency specialists, more than 50,000 construction and real estate firms experienced have begun the year in ‘significant’ financial distress.
Begbies Traynor’s latest Red Flag Alert says that there was a 17% increase in construction and real estate firms in financial difficulty at the end of last year, reaching 50,122.
Despite numerous industry surveys suggesting that construction is in pretty good shape, accountants at Begbies Traynor take a different view. They say that all sectors of the economy saw an increase in financial distress over the past 12 months, and construction is no different.
Partner Julie Palmer said: “Despite an improving economy, 2015 showed no shortage of challenges for UK businesses, with a slowdown in China and collapsing oil and commodity prices leading to stock market turmoil during the second half of the year. At the same time, manufacturing weakened significantly as a result of continued sluggish growth in Europe, while labour shortages and building materials inflation continued to plague the construction sector.
“With so many companies beginning the New Year in an unfavourable financial state and even the chancellor predicting black clouds on the horizon, 2016 looks set to be another challenging 12 months for UK corporates.”
Executive chairman Ric Traynor was equally gloomy: “Struggling businesses should not expect any respite in 2016, with the UK economy facing greater headwinds this year from slow global growth, lower levels of business investment and the highest levels of consumer debt seen for five years. Meanwhile the looming EU referendum, potential interest rate rises, and additional cost pressures, including the introduction of the new national living wage in April, give cause to yet more uncertainty for UK businesses over the coming months.”
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This article was published on 14 Jan 2016 (last updated on 14 Jan 2016).