According to a recent report, construction business such as civil engineering firms are in the top 3 industries inflicted by distress concerning finance.
Almost 10% of the UK workforce, is employed by the construction industry, making this sector a major asset to the UK economy. The sector is responsible for 7% of the UK’s GDP nationally.
However, following on from a stagnant winter, reduction in opportunities, alongside continuing tax stresses and rising costs, construction firms are facing financial pressures.
Begbies Traynor’s Red Flag Alert, suggests in two categories of significance, construction is ranked highly.
It ranks second and third in these categories: ‘significant’ distress and ‘critical’ distress. Q1 2025 reported that nearly 90,000 firms experienced ‘significant’ distress, with almost 6,500 of them in ‘critical’ financial distress.
Whilst ‘significant’ financial distress has been attributed to negative shifts, such as changes to profits, working capital and net worth, ‘critical’ financial distress is a severe state of hardship. In ‘critical’ distress, construction companies will face insolvency if immediate action, such as financial support, is not taken.
Clear warnings concerning the challenges to UK business have been issued by the Executive Chairman at Begbies Traynor. The challenges, placing many at risk of formal insolvency, have been associated with his tax and new tariffs, as well as minimum wage and National Insurance increases, but also decreased consumer confidence.
At AJL Finance, we specialise in civil engineering finance and engineering business loans. These are some of the many firms impacted by financial distress within the construction sector in need of support.
