One in eight construction firms are on the brink of collapse within the next three months and are unlikely to survive past April, reports say.
In an Office for National Statistics survey of 3,568 firms, analysts found that an increase in material costs, labour shortages, and a decrease in productivity due to social distancing measures all contributed to the challenges the construction industry is now facing.
In Northern Ireland, only 53% of firms are working at full capacity which is having a detrimental impact not only on businesses and their employees, with just under half receiving furlough, but also on the economy.
The Builders Merchants Federation warned of increasing material shortages due to import delays now that the UK has left the EU, with difficulties expected to run throughout the year. DRS Bond Management Director Chris Davies said:
“There is a distinct lack of confidence, particularly in the SME sector.”
‘How confident are you that your business will survive the next three months?’ is a question that has been posed to construction firms across the country and has been receiving concerning responses.
Between 9-23 December 2020 it was reported that one in twelve firms felt low or no confidence that their business would survive the pandemic.
“Unlike those [large firms] who maybe have good forward-order books, particularly with public sector work and infrastructure, I think your standard building and construction business is going to face a challenge.”
“I think we have to start seeing the end of a lot of zombie companies that have been propped up by government-lending through the banks and by furlough,” said Davies.
Despite ongoing struggles by construction companies during the pandemic, recruitment professionals have predicted a 10% rise in labour in the coming months due to a decrease in migrant workers entering the UK.
Whilst these firms are certainly not out of the woods yet, there is increasing hope for a brighter 2021.
Madeleine Raine
Featured image courtesy of Scott Blake via Unsplash. Image license is available here. This image has in no way been altered.
Madeleine Raine
Mads is a 23-year-old History graduate from Newcastle University. She is passionate about current affairs and British news, with a keen interest in investigative features. Aside from this, she is an avid reader, photographer, and yogi.