IPs Urged to Monitor Construction Businesses as Decline Forecast
The Construction Products Association has downgraded its forecasts for the construction industry with no growth expected in 2018 and CRS Managing Director Tim Shore warns insolvency practitioners to beware of this when assessing construction clients.
Falls in office, retail and factory developments in 2018 are expected to mean construction will flat line next year, despite a modest 2% forecast growth in house building.
The CPA warns that growth over the next couple of years is likely to be totally reliant on government infrastructure spending. Major projects in rail and water & sewerage such as HS2 and the £4.2bn Thames Tideway Tunnel will lift infrastructure output by 25% but in 2019 such investment will only lift the construction sector as a whole to a growth rate of just 2%.
CRS’s Tim Shore said “Recent decisions to cancel government funded projects, such as rail electrification in the North, are far from encouraging. Without the infrastructure investment construction businesses are likely to start to feel the pinch. Many smaller SME companies will see little benefit from investment in infrastructure directly and will take little comfort from the forecast decline in areas such as offices, factories and retail.”
He warned insolvency practitioners “to take a careful look at struggling construction businesses and assess forecasts in the light of the CPA findings. It’s too easy to assume recent growth levels will continue whereas the reality is likely to hit the cashflow of many construction companies hard!”