Building failures threaten suppliers

Published:  01 June, 2011

LONDON: Building company insolvencies have risen sharply, said accountancy firm, Wilkins Kennedy. It is the first quarterly rise in insolvencies in two years.

"Many companies could be forced to pass their pain down through their supply chain, which will have a big impact on sub-contractors, electricians, plumbers and builders merchants," said Anthony Cork, a director at the firm.

"The Government has slashed capital spending on infrastructure across the board in order to plug the deficit and that has pushed the construction sector into a double dip," he said.

It is the first quarterly rise in insolvencies in two years. The latest figures have been seized upon as a sign of a worsening economy, but could also be an indicator of the beginning of an upturn, when contractors are vulnerable to rising costs.

"The question now is how quickly private sector construction work will be able to pick up the slack left by public sector. So far this has not happened, said Mr Cork.

He added that smaller trades people who rely on work from construction companies could also feel the cuts.

"Many companies could be forced to pass their pain down through their supply chain, which will have a big impact on sub-contractors, electricians, plumbers and builders merchants," he said.

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