Construction business failures rise

Published:  07 February, 2011

UK: The latest (Q4 2010) provisional data on administrations in the construction industry shows 82 administrations of construction businesses which is a rise from the 68 construction company failures in Q3 2010.

"In some cases, the severe weather conditions in the latter part of 2010 played a key part in the failure of some construction companies where a halt in activity over a number of weeks was just enough to tip them over the edge," said Rupert Rawcliffe, construction sector director at Grant Thornton UK LLP. "Taking into account a fall in the level of employment in the sector, government spending cuts and the deferral of some projects, construction businesses would have felt the pinch in Q4 2010, leading to more going under this quarter than the last.

"This comes as a blow to the sector as it ends the eight consecutive quarters of a decline in administrations, which had been assisted by improved market conditions and strategies put in place by businesses and the government to ride out the storm.

"Unfortunately, recovery in the construction industry is still very fragile with order books still quite weak. Construction activity going forward will be largely dependent on how economic activity plays out both here and abroad. At the moment, uncertainty over future business prospects remains and will not be helped by the increase in raw material prices as well as the latest VAT increase which will add more pressure to the sector."

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