The challenges facing UK construction are many and varied: Brexit, Covid-19, war in Europe and soaring energy costs just for starters. So it is rather surprising that our annual run-downof the UK’s Top 100 construction firms (see pages 31–45) appears to show the sector bearing up remarkably well.
You might expect to see companies making losses and a number of them going out of business.
But this year only 14 of the Top 100 firms posted a pre-tax loss in their latest results. Instead, profits are up by a huge margin: the Top 100 posted posted aggregate pre-tax profits of £1.4bn this year. Last year, they registered an overall loss of £43m.
On the other hand, insolvencies are on the increase, with specialist contractors most likely to go under. As our analysis shows, this trend coincides with repayments of the government’s Coronavirus business support loans falling due – and a high rate of defaults.
Did former chancellor Rishi Sunak’s generous measures mask an underlying weakness in the sector? Only time will tell.
But now inflation is at its highest since 1981 and interest rates are also creeping up – the base rate is currently higher than at any time since the 2008 financial crisis. Against this backdrop, the rosy picture painted by this year’s Top 100 begins to look a bit flaky.