Property, Construction Bankruptcies Increasing in England, Deloitte Says
The number of real-estate and construction companies seeking bankruptcy in England and Wales rose by 11 percent in the third quarter as budget cuts and economic uncertainty led to canceled projects, Deloitte LLP said.
A total of 117 property companies and builders went into administration in the period, up from 105 a year earlier, Deloitte said today in a research report. The industries are unlikely to improve in the next quarter and medium-sized firms will be hurt more than larger contractors, the U.K. affiliate of Deloitte Touche Tohmatsu said.
“Rising energy prices and significant cuts to public and private sector building projects have brought a large amount of planned projects to a grinding halt,” Nigel Shilton, real- estate industry partner for Deloitte, said in the statement. “The next quarter is not going to bring any relief from the pressures.”
The U.K.’s recovery is faltering as global growth slows, Europe’s debt crisis crimps confidence and the government carries out the biggest budget cuts since World War II. A squeeze on household incomes from faster-than-targeted inflation and rising unemployment are eroding consumer confidence and undermining the housing market.
While mortgage approvals in August reached the highest level since 2009, the housing market remains “subdued” as tougher lending standards “locked thousands of first-time buyers out of the market,” Shilton said.
U.K. construction output almost stagnated in September as the level of new business fell for the first time since February 2010. A gauge of building activity based on a survey of purchasing managers dropped to 50.1 from 52.6 in August, Markit and the Chartered Institute of Purchasing and Supply in London said in a report yesterday. A measure above 50 indicates expansion.
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