Construction insolvencies shoot up 73% amid Carillion collapse
Construction insolvencies have jumped by 73% in the first quarter of 2018, compared with the final quarter of last year, according to new figures.
Creditsafe’s analysis of the sector showed there were 934 construction insolvencies in the first quarter of this year, up from 539 in the fourth quarter of 2017.
Its research showed there were 405,310 active companies in the sector, of which 3.3% are rated as being at “very high risk” of failure.
Just over 7.6% are at “high risk”, with 45.8% at “moderate risk”. Only 27.4% are rated as “low risk”, with another 15.9% at “very low risk” of insolvency.
Creditsafe also found that construction firms were finding it harder to get paid, with firms paid on average 16 days beyond terms.
Meanwhile, construction companies pay their suppliers on average 11 days beyond terms.
Cato Syversen, CEO of Creditsafe said: "Following the collapse of Carillion, the construction industry saw a fall in sales of 6.2%, a rise in debt owed to the sector of £4.3m, a 73.3% increase in company failures and 484 more CCJs.
“That is just the short-term impact in one sector. We are seeing similar challenges across other industries and it’s a waiting game to see what the mid to longer term future will deliver.”