CONSTRUCTION INDUSTRY NEWS
Inflation hurts construction SMEs
D espite nearly 60 per cent of the UK’s construction SMEs feeling optimistic about 2025, as many as 56 per cent find inflation a key challenge – only 48 per cent of SMEs in other sectors reported the same. The new research by Bibby Financial Services of 1,000 UK SME owners and decision-makers, including more than 200 in the construction industry, found that many businesses were struggling with economic uncertainty. But construction SMEs were most inclined to spend through this period.
many respects, the construction sector is the bellwether for the economy, and it’s clear that many of the sector’s SME owners are seeing an increase in work volumes, which will undoubtedly act as a positive multiplier effect for adjacent sectors, such as manufacturing and transport. “Despite this optimism, the high cost of materials and shipping, and pressure on supply chains triggered by geopolitical factors in Europe and the Middle East continue to hamper the growth of many construction firms as many businesses price- in this risk, exacerbating the issue throughout supply chains. Add to this the increased susceptibility to bad debt and the ongoing challenges faced by construction firms in accessing the finance they need to fulfil existing orders and take on new work, the remainder of 2024 could be a pivotal time for the sector, and the wider economy.”
Additional challenges include: ● Materials cost – 65 per cent ● Supply chain disruptions – 42 per cent ● Debt – 34 per cent ● Access to external finance – 53 per cent
project cancellations caused by rising costs. Adrienne Turner, Framework Manager at SCF, said: “The combination of firms seeing more tendering opportunities despite the high level of insolvencies is creating a complex mix in the industry, likely leading to some firms nearing collapse going in with competitive bids to keep them afloat. “With challenges likely to remain throughout 2024 as interest rates remain high, clients need to be careful about who they select as simply selecting on price could be incredibly damaging for a project if the chosen firm is unable to deliver.”
Derek Ryan, UK Managing Director at Bibby Financial Services, said: “In
NEWS IN NUMBERS
500,000 The approximate number of
new homes that could be built on London’s brownfield sites. Source: SBA Property Management
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