Construction firms scale back amid market uncertainty

Carly Thorpe, Construction & Engineering Partner at Walker Morris, said: “The latest insolvency figures reflect the continued pressures facing the construction sector. Rising costs, delayed project approvals, labour market uncertainty and questions around future demand are all contributing to a slowdown in activity, placing increasing strain on cashflow and making it more difficult for some businesses to remain financially resilient.

“We’re seeing these challenges play out across the sector. For housebuilders, affordability constraints and slower sales can delay the return on significant upfront investment, while uncertainty around future demand continues to influence investment and development decisions in the retail and office markets. Where businesses have expanded rapidly or moved into new markets, these pressures can quickly expose weaknesses in funding and cashflow management.

“Some businesses are restructuring and divesting underperforming areas to protect core operations and preserve value. As it stands, focusing on profitable and established markets may prove more sustainable than pursuing rapid expansion.”

She added: “The government’s proposed Commercial Payments Bill is a welcome step towards addressing the cashflow challenges facing the construction sector. Measures aimed at tackling late payments and cash retention should help improve resilience across the supply chain, although they are unlikely to provide immediate relief for businesses already under pressure.”