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Liquidation likely for north-west construction firms

Date Added: 03/12/2012  

Almost one-third of construction companies in the north-west of England could face liquidation in the next year.

This is according to new research conducted by insolvency body R3, which found that 25 per cent of businesses in the region as a whole are at risk.

It also revealed that more than 6,600 civil engineering organisations that are registered in the north-west are close to collapse following an absence of development finance and cuts to public spending.

Jeremy Oddie, regional chairman of R3 and head of recoveries at accountancy firm Mitchell Charlesworth, stated companies within the construction sector are in need of business insolvency help the most.

He said that developers are struggling to raise funds for their work and in many cases, they are only able to do so off the back of an anchor tenant.

"At the same time, while there are a handful of ongoing projects, including the Metrolink extension and the refurbishment of Manchester and Trafford town halls, many public sector projects have been put on hold," Mr Oddie added.

These findings follow an admission from chancellor George Osborne that it is going to take the UK longer than he hoped to recover from the financial crisis, due to warnings the government could miss its key economic targets.

However, Mr Osborne claimed that the nation's deficit is down by one-quarter and a return to the ideals of shadow chancellor Ed Balls that focus on borrowing and spending would be a "complete disaster" for Britain.

Mr Oddie stated builders from some of the smaller north-west construction businesses have received some comfort from the fact that homeowners are choosing to upgrade their properties instead of trying to move and put them on the market.

He concluded: "Overall times are tough for construction companies and many will find it difficult to survive the winter."

The latest Markit/CIPS Construction Purchasing Managers' Index showed that new construction orders fell for the fifth consecutive month in October.


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Posted by Julie Cutts

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