Construction Industry Recovering in UK

The construction industry has been among the most competitive sectors in the United Kingdom. The growth and recovery have been slowed down by the increasing public sector spending cuts and the inadequate bank financing that has contributed to a large extent in the difficulty of starting up projects. This has resulted in the decrease in workloads and reduced profit margins. On top of the low profit margins, the situation has been further worsened by the risk of upstream insolvencies, reduced access to capital and increased difficulty in getting retentions.

Some of the sectors in the construction industry that are struggling to recover is the screeding industry. Screeding involves putting a layer of special concrete on the surfaces of a house to improve its quality or to prevent water from sipping through the floor. The cost of raw material, coupled with the increasing cost of the modern equipment used in the construction process has threatened to kill this industry. With the improvement in the banking industry and government intervention, the field is slowly but steadily recovering and will be among the top fields in the years to come.

The construction industry by nature has high financial gearing. Most banks have been ready to finance this industry because of the presence of strong cash flows and good security levels in the industry. The breach of covenants between the industries stakeholders hasoccurred over the past few years because of cash flow problems. It is for this reason that most of the suppliers in the industry are increasingly looking at the debt profile of the buyer and the ability of them to cover their debts, as well as their level of liquidity. Taking such precautionary measures has been one of the strategies used in spearheading recovery of theindustry.