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Financial difficulties rocket 22% among construction firms

The number of construction firms facing “significant” financial distress has risen by more than a fifth in a year according to the latest figures by recovery practice Begbies Traynor.

The firm’s latest research found that 40,495 construction firms finished Q2 2017 with financial difficulties, up from 33,222 in the same period in 2016 – a 21.9 per cent increase.

Begbies Traynor said the rise, which also saw the number of real estate businesses in financial distress grow by a third from 21,373 in Q2 2016 to 28,259 in the latest survey, suggested a slowdown in the UK housing and construction markets.

The UK as a whole had 329,834 companies experiencing “significant” financial distress at the end of Q2 2017, up a quarter on the same period last year.

The research comes as a new study by the Federation of Master Builders published on Monday found that rising prices had forced almost a quarter of SMEs to raise their prices as margins get squeezed.

The FMB study found that costs of materials including bricks, timber, insulation and plasterboard had all risen, with timber rising by 20 per cent and Spanish slate by 22 per cent in a year.

Commenting on the number of firms facing financial difficulty, Begbies Traynor executive chairman Ric Traynor said: “Our Red Flag research shows that a recent loss of momentum in the economy is putting increased financial pressure on UK businesses, with SMEs bearing the brunt of this rising distress, as businesses contend with uncertainty over Brexit negotiations and an inconclusive election result, alongside rising costs.

“These significant increases in financial distress also point to a slowdown in business investment at a time when the overall growth rate of the UK economy remains stubbornly sluggish.”

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