The number of UK construction companies in significant financial distress has risen by a quarter in the past year and doubled in the past 18 months.

According to Begbies Traynor’s Red Flag Alert research for Q1 2018, which monitors the financial health of UK companies, 60,541 construction companies and 115,249 support services companies are in ‘significant’ risk of insolvency.

The number of companies that Begbies Traynor’s insolvency analysts regards as being at serious risk of collapse has more than doubled in the past 18 months. In October 2016, they had a red flag alert against 29,000 construction companies.

Across the UK economy as a whole, there are 477,210 businesses currently in financial distress, up 33% compared to when Article 50 was triggered on 29th March 2017.

Currency fluctuations, rising interest rates, subdued consumer spending and a cooling property market are just some of the factors that have combined with growing political uncertainty to push nearly half a million UK businesses into financial distress over the past 12 months.

“Should these headwinds continue, they could impact the government’s bargaining power when it comes to negotiating new trade deals after the UK’s exit from the European Union, which would be a major concern.

Chairman Ric Traynor added: “Although the UK economy is still growing, it is now starting to lag behind many other G20 members, with predicted GDP growth during 2018 of around 1.7%. The latest Red Flag figures reflect this slowdown with increased financial distress being felt across every sector and region of the UK.

“The UK Construction sector last month suffered its biggest drop in activity since the 2016 Referendum vote, as Brexit concerns and the fallout from Carillion’s collapse caused further delays in large infrastructure and construction projects.

Speak to the Daniels Silverman team about how we can help recover and negotiate for your business.

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