Licensed Insolvency Practitioners With National Coverage
According to the latest data from the Insolvency Service, businesses within the construction sector are going bust at the fastest rate in a decade. As a result, the number of company insolvencies overall is being driven to a 13-year high.
Data found that for the first half of the year there were 10,717 company insolvencies – of which the construction sector accounted for a fifth (2,094 insolvencies). When analysed more closely, in just the first quarter the construction sector reached 1,048 insolvencies. This marks the highest level since the same quarter of 2012. For the second quarter, numbers reached its highest since Q3 of 2009.
Construction firms, which make up 7% of the UK economy, are being hit by rising material costs, staff shortages and falling consumer demand – leaving no other option than seriously squeezed margins.
When you take into consideration that for each building project, the materials account for around a quarter of the total cost, it is no wonder there are struggles. The price of core materials such as timber and steel have risen around 17%-18% each. Smaller, local builders struggle most with vulnerability since they cannot benefit from economies of scale.
Passing costs onto customers in response is proving difficult with clients rather just pulling out of the project and fewer new ones being requested.
The construction industry has faced trouble for some time now, as reflected in data overtime – will the tables turn or is this the way forward for the sector?