While the construction industry as a whole is continuing to face some tough challenges, the latest research by insolvency trade body R3 shows that the sector is performing relatively strongly in Yorkshire.
R3’s figures reveal that that of the 18,934 active construction businesses in Yorkshire, just 4,979 or 26.3% were identified as being at higher than normal risk of insolvency in October, compared with an average of 27.9% across the UK. Of the 12 regions surveyed, only the West Midlands (26%) and Northern Ireland (26.2%) had lower proportions of construction firms at higher than normal risk of insolvency. The region with the highest proportion of businesses at risk in the sector was the North East with 31.3%.
Overall, Yorkshire had a relatively strong month in a number of sectors where it again had amongst the lowest proportion of businesses identified as being at higher than normal risk – manufacturing (18.8%, compared with 21.9% across the UK); agriculture (16.5%; 19.1% across the UK); and professional services (30.4%; 32.7% across the UK).
Adrian Berry, chair of R3 in Yorkshire and restructuring partner at Deloitte LLP, commented: “Post-EU referendum, the construction sector seems to be defying the worst fears, buoyed by the resilience of the housing market with confidence further boosted by the announcement at the recent Conservative party conference of £5bn of funding for housebuilding.
“Construction has a knock-on effect on so many other sectors that it always bodes well for the health of the economy overall when it is growing. It is good to see the sector performing particularly strongly in Yorkshire, however businesses should be aware that there is still danger of a rebound with growth predictions weaker than at the beginning of the year, a fall in investment spending year on year and a weak pound driving up the costs of imported raw materials.”
R3 uses research compiled from Bureau van Dijk’s ‘Fame’ database of company information to track the number of businesses in key regional sectors that have a heightened risk of entering insolvency in the next year.