Research reveals that 79,207 construction businesses have experienced “critical financial distress” in the three months leading up to the 30th of September 2022, an increase of 9% from the previous year.
Data from the County Court Judgements (CCJ) shows a 24% increase in the number of construction businesses being issued with a CCJ and owe more than £5,000 in corporate debt. A total of 561 construction businesses were in this situation in Q3 2022, compared to 453 in Q3 2021.
The factors causing financial hardship for construction businesses include the impact of rising inflation on the economy, higher prices for labour, materials, and energy, as well as additional pressure to repay the government’s COVID support loans granted to help businesses through the pandemic.
Begbies Traynor partner, Julie Palmer said, “Having emerged from the pandemic, many companies were hoping for an economic boom but that has simply fizzled out, as supply chain issues and the invasion of Ukraine have taken their toll by driving up raw material and energy costs and reducing both business and consumer confidence.
“We are now in a very high inflationary environment that’s piling pressure on businesses that were already weakened by the shock of the pandemic.”
“Businesses that borrowed to survive for years are stuck with levels of debt that they may be unable repay – especially with interest rates expected to rise to circa 6 per cent in 2023,”
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