The construction industry could sink deeper into recession as the number of companies who became insolvent rose by nearly a fifth in the last financial quarter.
There were 948 insolvencies in the first three months of the year, a 19 percent increase from 769 from the previous quarter, according to accountancy firm Wilkins Kennedy.
Whilst banks and City firms have recovered well over the last two years, building firms have continued to shed jobs and whilst the overall economy is growing, construction shrank in the last two quarters.
Previously the sector had been propped up by large public sector projects such as Building Schools for the Future. The government’s austerity measures though will see sharp cut backs in public spending of such projects.
Director of Wilkins Kennedy said: The government has slashed capital spending on infrastructure across the board in order to plug the deficit and that has pushed the construction sector into a double dip. Fiscal stimulus at the start of the recession had included substantial infrastructure projects that keep the construction sector’s head above water. But that support is now being withdrawn.
“The question now is how quickly private-sector construction work will be able to pick up the slack left by the public sector. So far this has not happened.”