Some 1,000 construction companies went out of business in the last three months, according to official statistics.
The figures show 700 construction companies went out of business during the period, but when compulsory liquidations are taken into account, the final number will be more like 1,000, according to risk managers CR Management.
The statistics show that 50% more construction companies entered Company Voluntary Arrangements in the last three months than during the quarter before.
However, the number of construction companies forced into receivership dropped by 32%. Overall construction insolvencies decreased by about 4.5%.
Company insolvencies across all industries decreased by 8.4% on the previous quarter and by 17.8% on the same period a year ago.
Alan Harris, partner at CR Management says, “The number of insolvencies within the quarter is in line with what we were expecting, but it’s still a loss of approaching 1,000 companies from our industry in just three months and I predict this is about to get worse.
“The hung parliament today will cause uncertainty for the next six to nine months and will prolong the recession in the construction industry. Construction in the private sector has already been affected by banks unwillingness to lend, and it is likely that public spending will now also dry up. As a result we expect to see the number of construction company insolvencies rise over the summer and continue through to the end of the year and into 2011. In addition I expect to see more companies looking overseas for businesses opportunities.
“There will remain a lack of confidence in the private sector until there is a clear Government with explicit capital expenditure spending plans and a relaxation of bank lending policies.”