Since Carillion collapsed in January, the number of construction companies becoming insolvent has spiked 20 per cent.
Accountancy Firm, Moore Stephens report that the giant constructions firm’s liquidation caused significant knock on effects for the whole industry supply chain in the UK.
Figures from the government’s insolvency services showed that 2764 construction firms fell into insolvency in 2017/2018, a rise of 6 per cent from last year. Following Carillion’s collapse, 780 construction firms entered insolvency, being 20 per cent higher when compared to the same period a year ago.
Carillion were involved in large-scale projects, globally. Their work included hospitals, military bases, road and rail projects, but to name a few. Their liquidation left subcontractors with substantial bad debt and huge work losses. In particular, the hardest hit is said to of been to the SMEs and specialist subcontractors, who relied on the firm for a large amount of their work. For these, it is likely that all they were owed from Carillion was written off.
Lee Causer, from Moore Stephens stated: ‘’The collapse of Carillion sent shockwaves through the construction sector, and we are seeing more insolvencies as a direct result. Large construction companies are infamous for squeezing the profit margins of the contractors and sub-contractors who work from them.’’