The number of construction companies in financial distress fell during the last quarter, in comparison to the second quarter of 2009, according to research by business recovery specialists Begbies Traynor.
The firm's Red Flag Alert, showed that 17,033 construction firms were experiencing financial problems in the last quarter, as opposed to 20,566 in the same quarter in 2009.
Begbies Traynor defines financial distress as companies facing a court action, county court judgements totalling £5,000 or more, winding-up petitions, or poor or out date accounts.
However, despite the drop, executive chairman Ric Traynor warned: “The government’s well reported austerity measures will be felt widely the sectors most directly dependent on public sector spending, which include construction.
“In particular, Construction and IT have shown a much lower rate of recovery in the second quarter than other sectors.
“It will not be until after the Government’s Comprehensive Spending Review in October that we will know for certain the allocation of spending cuts, but there is a growing risk that, even if the UK avoids a double dip recession, it could develop a twin track economy, with public-sector dependent industries facing higher levels of financial distress than sectors which are less directly linked to government spending cuts.”