Resilience to recovery: The future of UK construction
Sector challenges Firm foundations
And with order books remaining relatively healthy, albeit against a more competitive backdrop, businesses will be looking ahead for further positives, including settled inflation and a much-anticipated interest rate cut from the Bank of England – both factors that would help boost client and consumer confidence further. Many firms will be moving onto the front foot to pursue growth – looking to secure new financing, new business and to invest in their people and their operations.
For more than a year, the construction industry has been hard-hit by the intense headwinds that have been felt across the UK economy. Sustained inflation – which has now begun to ease – has driven up project budgets while elevated interest rates have increased funding costs for developers and mortgage holders alike, serving to reduce demand for contractors. At the same time, supply chain disruption – a factor that has intensified in recent months due to challenges in global shipping lanes – and skills shortages have stretched firms’ ability to complete the work in their pipelines. Together, these issues have heaped pressure on businesses that are, in many cases, still saddled with high levels of debt from the pandemic period, with less headroom to absorb shocks. And for some, this has proven unsustainable. According to data from the Insolvency Service, construction saw the highest number of insolvencies of any UK business sector during both 2022 1 and 2023 2 .
Blueprint for action
In this report, we’ve gathered the views of more than 500 senior decision makers in construction businesses across the UK on what has defined their operating landscape over the past year, and what challenges, and opportunities they see ahead. We hope this will be valuable in showing where shared pain points sit, and to inspire firms to consider what else they can do to make sure they are able to fully capitalise on any and all opportunities that lie ahead. If this sparks ideas or questions from you, please don’t hesitate to get in touch.
Get in touch
Green shoots
Justin Matthews Partner Financial Advisory London +44(0)7759 537 315 justin.matthews@frpadvisory.com
However, the sector continues to be one of the UK’s most resilient. Indeed, since the start of 2024, we’ve seen improving conditions and demand, with optimism amongst firms reaching its highest level in more than two years 3 .
1 https://www.ons.gov.uk/businessindustryandtrade/constructionindustry/articles/constructionstatistics/2022 2 https://www.credit-connect.co.uk/news/insolvency/business/construction-insolvencies-continue-to-rise/ 3 https://www.pmi.spglobal.com/Public/Home/PressRelease/1604f755a8aa4888ae4b084caa5e883e
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