Reduction in construction administrations

Published:  06 February, 2012

LONDON: Mark Wilson, head of construction at Baker Tilly Restructuring and Recovery LLP, commented on the insolvency statistics for the construction sector taken from Q4 2011 data released this morning by the Insolvency Service.

“Today’s numbers show that administrations have fallen form 94 in Q3 to 71 Q4 2011 a reduction of nearly 25%.

“Across all insolvencies, the sector saw a reduction of 30% in failure over the previous quarter. The overall failure figure of 650 is the lowest experienced in the last four years which peaked at almost double (1209) in Q1 2009. But is this a false dawn?

"There are concerns that government cuts in new build projects have yet to fully bite whilst the industry continues to complete projects already committed to.

"There may be opportunities for those who refurbish properties as clients make do with their existing stock of buildings.

There is likely to be a shift in the favour of Civil engineering as government spending increases in road and rail building, although many recently announced projects will take some while before works commence.

"The overall economic uncertainty and prospects for growth and new jobs will continue to have a dampening effect on the sector.

“Overall, a cautious welcome for this good news. However, there is always a time lag in getting new projects off the ground and therefore the full impact of the delayed economic recovery may yet to still be seen.”

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