UK Construction Sector Update – December 2023

Reduced demand, elevated credit risk and high interest rates continue to put the Construction sector under pressure.

Tokio Marine HCC’s Construction Sector Report analyses the difficult conditions throughout the sector, with indicators suggesting a challenging 2024.

Any benefits from potential interest rate cuts are expected to be swallowed up by higher inflation rates, dampened consumer confidence and high insolvency rates.

Construction was home to almost a fifth of all corporate insolvencies in the UK in 2023, with figures having risen by an additional 4% year on year.

Post-covid, poor payment performance has re-emerged with longer delays being reported. This creates pressure on the working capital cycle of businesses who had adjusted to prompter payments in recent years.

While high interest rates and rising credit risk will continue to undermine growth, political developments (upcoming elections) and longer-term trends (environmental policy) present further challenges.

With uncertainty throughout the Construction sector, it essential to have appropriate protection in place in the event that one of your debtors enters insolvency.

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