Construction Industry in 2019

Will another big construction firm fail in 2019? Quantuma's Chris Newell takes a closer look


by Chris Newell

Will another big construction firm fail in 2019? Quantuma's Chris Newell takes a closer look.

Comprised of 3.1 million workers across the UK, the construction industry is one of the biggest employers in the country.  Often used as a key indicator for overall economic health, there is no denying that both small and large companies within the sector have faced issues over the last year.

The latest figures of construction output in October 2018 from the ONS show a growth in new private housing, but a decline in infrastructure, new public housing and total repair and maintenance.  These numbers equate to a small decline of 0.2% compared to the previous month but in effect mean that the industry is at a stand-still.

Perhaps a sector that feels Brexit uncertainty most keenly, it is no surprise that confidence has fallen during the latter half of this year.   The insolvency statistics clearly demonstrate the strain companies are under, with nearly 3,000 insolvencies in the industry this year.

I predict that the construction sector will continue to experience this significant pressure with it being likely that another large name will fail.  As we saw with Carillion, the collapse of another large firm could have a much wider impact affecting not just the firm itself, but also the supply chain and contractors working on projects.

Pressure on house prices is likely to continue, with the uncertainty of Brexit being the primary driver, this combined with the rising cost of materials and increasing costs of employment paints a grim picture for this sector.