In today’s turbulent economic climate, the construction industry is facing unprecedented challenges, leading to a significant number of companies falling into insolvency.
According to the latest data from the Insolvency Service, an executive agency of the Department for UK Business and Trade, over 4,300 construction firms closed their doors between November 2022 and October 2023, marking the highest rate of closures since the aftermath of the 2008/09 financial crisis.
The repercussions of these closures leave several construction projects abandoned and clients grappling with unsafe and incomplete sites, according to the Department for UK Business and Trade.
Despite approximately 99,000 construction contractor firms operating in the UK in 2023, recent findings from the Begbies Traynor “Red Flag Alert” report indicated that 5,919 construction companies were identified to be in critical financial distress, up by 46% since July 2023.
Martin Vella, managing director of Pexhurst pointed out several factors contributing to the closures. These factors encompassed the lasting effects of the Covid-19 pandemic, reduced consumer confidence, rising inflation and interest rates, workforce shortages, and delays in delivery times of equipment and materials. These challenges have not only increased pressure on businesses throughout the UK but have also placed a substantial burden on construction supply chains.
Vella added that many business owners, grappling with the looming spectre of insolvency, turned to loans at rock-bottom rates during the pandemic to stave off collapse. However, as interest rates climb and inflation reaches new heights, these firms found themselves navigating treacherous financial waters, fraught with uncertainty.
Vella highlighted that Pexhurst were able to remain financially stable and secure. With a ‘steadfast commitment to delivering exceptional customer service’, the company placed a premium on transparency and collaborated closely with clients from project inception to ensure sound financial management practices were adhered to.
Robert Vincent, commercial account manager at Dixons Commercial Insurance Brokers, attests to Pexhurst’s financial stability. He stated: “As Pexhurst have multiple contracts with performance bonds in place at any one time, it is a testament to their financial strength that we have been able to provide a significant guaranteed facility with Aviva Insurance UK PLC.”
