The number of construction companies with bad debts climbed by 30% during the first quarter of this year, according to research from insolvency specialist Begbies Traynor.
Some 22,990 construction firms reported financial problems during Q1 2010, and increase from 17,736 in the last quarter of 2009.
Begbies Traynor's Red Flag Alert monitors companies which are facing a court action, county court judgements totalling £5,000 or more, winding-up petitions, and poor or out date accounts
Construction was one of the worst-hit sectors, with the number of UK companies in financial distress rising 14% across all industries.
In total, 161,601 companies were found to have “significant” or “critical” financial difficulties and owe about £55bn to creditors and suppliers.
Begbies Traynor Executive Chairman Ric Traynor said: “While the economy appears to be showing positive signs of recovery, the magnitude of the liabilities still at risk of default represents a serious risk to creditors. It is this ripple effect which represents a real threat to a sustained economic recovery.”
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