The proportion of construction companies in Yorkshire at greater than average risk of insolvency has stabilised in the first couple of months of 2019 following sharp rises across 2018, according to the latest research by insolvency and restructuring trade body R3.
The construction sector is often seen as a barometer of the economy’s wider wellbeing.
Having increased from 39.3% in February 2018 to 46.6% in December 2018, the proportion of construction businesses at elevated risk of insolvency in the next 12 months had levelled out to 47% by the start of February 2019.
In Yorkshire, there are currently over 26,000 active construction businesses, with over 12,000 of these considered to be at greater than usual risk of insolvency, equating to 47% of the region’s construction firms, slightly above the UK-wide figure of 45.6%.
The poorest performing UK region was the South West, with 49.8% of construction businesses at higher than normal risk, and the strongest region in the sector was London with just 41.8% at increased risk.
Overall, Yorkshire businesses again had a solid month with none of the sectors monitored by R3 seeing an increase of more than 2% between January and February of businesses at greater than usual risk. In the region, there was a rise of just 0.4% of businesses at higher than normal risk across all sectors, in line with the previous six months’ performance which saw either falls in risk or rises of less than 1%. Overall, 44.6% of Yorkshire-registered companies were at elevated insolvency risk in February 2019 (UK: 43%).
“The first quarter of the year is often a difficult period for many sectors and it’s reassuring to see Yorkshire’s construction businesses continuing to maintain stable levels of risk, particularly when compared with the tough start they experienced in early 2018,” says Eleanor Temple, chair of R3 in Yorkshire and barrister at Kings Chambers in Leeds.
“Despite continuing political uncertainty, there is lots of activity in the region with cranes dotting the region’s city skylines. We’ve seen plenty of new commercial developments get underway in 2018, particularly in the education sector, including the major construction at Quarry Hill of the new Leeds City College Campus.
“It’s encouraging not only to see Yorkshire continuing to invest in the future, but also to know that so many other businesses in the region will benefit from the positive knock-on effect of the construction sector’s resilience.”
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.