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More than 100 building firms predicted to go bust each week in 2023, according to new research

5th January, 2023

New research from Red Flag Alert suggests that the construction sector is going to face some trouble this year, with financial experts predicting more than 100 building firms to go bust every week.

This is no shock, with construction having faced difficulty before, and as The Insolvency Service reported before Christmas, businesses within the construction sector are going bust at the fastest rate in a decade.

According to Red Flag Alert’s research, there is around £300m in bad debt within the UK construction industry, as we enter 2023. This could rise to £1bn by the start of 2024. Ultimately, firms who usually keep their heads above water though the current recession, are being dragged under by the bad debt of those whom fail.

Why are there so many unpaid bills? Well, with much pressure from staff and supply chain issues for the sector, what do you expect? Mixed with Covid and all the implications left, along with inflation and rising interest rates. Things do not look good.

Chief Economist of Red Flag Alert, Dr Nicola Headlam remarked:

‘’ This is not good news for the industry and UK as a whole. This will lead to a much smaller pool of construction companies available for contracts and for suppliers to do business with. The post-recession economic bounce back will be hampered by a lack of building companies available for projects in the next growth stage, and a supply chain that will be unable to respond to growth signals This will choke off growth in the next economic cycle.”

Its looking to be a pretty perfect storm for insolvencies this year in the construction industry. And what a time! With this recession, we need construction to lead the way forward, particularly with the housing crisis we are in. Will the construction industry continue to decline or is there at least some hope for a healthier future?

If you are a worried director of a construction firm or a business related, do get in touch. Let our expert advisors talk through and consider the best way forward.

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