More than 50,000 construction and real estate firms in the UK are experiencing “significant” financial distress, according to Begbies Traynor.
The independent insolvency firm said its Red Flag Alert research for Q4 2015, which monitors the financial health of UK companies, revealed that 50,122 construction and real estate firms are in a challenging financial state, a 17% increase on the previous year.
Ric Traynor, Executive Chairman at Begbies Traynor, said: “Struggling businesses should not expect any respite in 2016, with the UK economy facing greater headwinds this year from slow global growth, lower levels of business investment and the highest levels of consumer debt seen for five years.
“Meanwhile the looming EU referendum, potential interest rate rises and additional cost pressures, including the introduction of the new National Living Wage in April, give cause to yet more uncertainty for UK businesses over the coming months.
“A proactive, not reactive, approach will be crucial to businesses’ financial strength in 2016, both in terms of managing their cost bases while also driving expansion in a low growth environment.”
The research showed that a total of 268,898 UK companies ended 2015 in “significant” financial distress, an overall increase of 17% compared to 2014.
However, companies in the construction and real estate sectors performed better than the service, manufacturing and consumer business industries, where firms experiencing “significant’ financial distress in Q4 2015 were up 19%, 18% and 18% respectively year-on-year.
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