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Begbies Traynor warns over construction firms' future

Business rescue specialists Begbies Traynor have warned the UK’s construction industry faces a tough 2009 with hundreds of firms facing winding-up orders.

The Begbies Traynor Red Flag Alert report in November showed 289 construction companies face ‘critical’ problems with County Court Judgements totalling over £5,000 or Winding-Up Petition related actions.

The recovery specialists said it was likely that a major house builder may be forced into administrationm such is the scale of the problem hit the sector.

New Begbies Traynor red flag figures for the fourth quarter of 2008 are due out later this month.

Begbies Traynor partner David Hudson said: “It will take a while before the cogs in the construction industry machine start moving again.

“With the banks still cautious regarding their lending to both developers and residential buyers, new money for starting housing projects is down and mortgages are still more difficult to obtain than in the recent past.

“The property market has not yet hit rock bottom and investors with funds available are still waiting for the best opportunities to arise from the fall in value of commercial and residential properties.

“As a number of construction companies are highly geared, the decline in turnover will provide major funding issues going forward.

“It will be very difficult for the larger house builders to survive the potentially prolonged downturn in the market and there is the possibility that one of the major listed house builders will go into some form of insolvency procedure in 2009.”