UK Construction Sector Update – June 2024

Credit risk in the construction sector remains high with the upcoming elections causing further uncertainty.

Tokio Marine HCC’s sector report for June 2024 outlines the challenges facing the construction sector.

On a positive note, inflation has followed a downward trajectory in 2023 and this has continued into the first months of 2024.

However, latest data from the ONS indicates a bad start for the construction industry in 2024. Overall output in the sector has fallen by 2.2% in the three months to April, compared with the November 2023 to January 2024 period.

Other indicators mirror these figures, with sand and gravel sales having fallen for six consecutive quarters whilst brick and concrete block production in the UK has also been on a downward trend for quite some time.

Typically, business failure risk in construction has been high due to a combination of small profit margins and fixed price contracts. The sector is hugely overrepresented in UK insolvency figures: accounting for 13.8% of all registered companies in the UK, they are responsible for 17.4% of all insolvencies.

It is essential to have appropriate protection in place in the event that one of your debtors enters insolvency. We’ve recently placed a number of policies within the construction industry and our new clients can grow their businesses with the knowledge that they’re protected.

You can read the full report from Tokio Marine HCC here.