More than 14,000 real estate and construction companies are on the brink of collapse, according to a report from insolvency specialist Begbies Traynor.
The company’s Red Flag Alert report for the final quarter of 2023 found that more than 47,000 businesses in the UK are at critical levels of financial distress, with the construction sector being the most at risk and real estate the third most vulnerable.
It found 7,849 construction companies and 6,228 real estate and property services businesses to be at critical risk levels, accounting for almost a third of the UK’s total between them.
The figures illustrate worsening conditions for the sectors and for the UK overall.
Compared to the previous quarter, financial distress in construction was up by a third and in real estate up by a quarter.
In total, 22 sectors were covered by the report which found the number of UK companies near collapse in Q4 2023 had increased by 25.9% compared to Q3 2023.
At a level below this, 539,900 UK businesses were in significant financial distress in Q4, up 12.9% on the previous quarter and up 5.6% on the equivalent period in 2022. Construction accounted for 83,332 of this total, while real estate has 82,431 companies starting 2024 in significant distress.
Begbies Traynor partner Julie Palmer says: “As we saw in the previous quarter, the strain being placed on companies has extended well beyond the consumer facing businesses with bellwether sectors like construction and real estate now in serious jeopardy.”
Begbies Traynor executive chairman Ric Traynor said: “Unfortunately, there are no signs of an easy fix and, with geo-political uncertainty continuing to rise and a hike in the national wage around the corner, the backdrop is hardly improving for an economy that is still firmly in recovery mode post-pandemic.
“For many businesses, I fear soldiering on in this environment will prove to be one step too far and I expect thousands of debt-laden businesses to start to fail this year.”
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