Brexit puts almost 50,000 property and construction firms at risk

Brexit puts almost 50,000 property and construction firms at risk

Almost 50,000 property and construction firms with “shaky” foundations could bear the brunt of Brexit, according to research carried out by Begbies Traynor.

The insolvency firm revealed that 49,186 construction and real estate businesses were classified as experiencing “significant” financial distress ahead of the EU referendum in the second quarter of 2016.

The firm warned that experts are now predicting London house property prices could plummet by up to 20% following the decision to leave the EU.

Julie Palmer, partner at Begbies Traynor, said: “UK construction and real estate has certainly been hit hardest following the Brexit result, with many high-profile investors pulling out of UK property over the past three weeks.

“…The foundations for this sector are looking decidedly shaky.”

Despite the high proportion of construction firms at risk, Begbies Traynor found that financial distress decreased across every sector in the UK prior to the referendum.

London-based business enjoyed the biggest improvement, with the number of companies in significant distress falling by 5% in Q2 2016 to 43,737.

However, Begbies Traynor said this trend could now reverse as a result of financial turmoil in the wake of the Brexit vote.

Ric Traynor, executive chairman at Begbies Traynor, added: “Although more than half the country voted for a Brexit, the result has undoubtedly caused a spike in uncertainty, while raising concerns over job security, contributing to weaker consumer confidence and the deferral of investment plans.

“All of which is likely to impact spending and business growth in the short term.

“…We expect the business environment to worsen over the next six months, at least, before we settle into the ‘new normal’.”

Earlier this year two trade associations said Brexit was set to have a major impact on developers and housebuilders.

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