June 10, 2019
By David Milliken
LONDON (Reuters) – British construction firms report having almost a third less work in the pipeline than a year ago, with Brexit and the collapse of larger contractors a major worry, an annual survey of subcontractors showed on Tuesday.
Subcontractors reported having 19 weeks of work to fall back on, down from 27 weeks a year earlier, according to the survey by trade finance provider Bibby Financial Services, an advance copy of which was provided to Reuters.
The subdued mood echoes official construction data released on Monday, which showed a sharp slowdown in annual growth to 2.4% in April, while May’s IHS Markit/CIPS construction purchasing managers’ index (PMI) dropped to its lowest since March 2018.
“It’s been a tough year for the subcontracting sector, with the industry reeling from the collapse of two large high-profile contractors – and further impacted by the recent announcements regarding British Steel, Bibby’s managing director for construction, Helen Wheeler, said.
Brexit was the most commonly cited threat on the horizon, named by a quarter of firms, but two thirds of the subcontractors said they had not prepared for it.
Britain is due to leave the European Union on Oct. 31. An earlier planned departure date on March 29 prompted many manufacturers to stockpile raw materials in case of border disruption, only to be wrongfooted when Brexit was delayed.
“Brexit, the dominance of large contractors and late payment problems are all acting as brakes on the sector,” Wheeler said.
Many smaller British construction firms have been left out of pocket by the collapse of by major contractors Interserve in March and Carillion just over a year earlier.
(Reporting by David Milliken; Editing by Kirsten Donovan)