New report reveals concerns amongst construction firms in the Midlands

A new report from FRP, the business advisory firm, reveals concerns among construction firms in the East and West Midlands about their ability to stay in business through 2025.

In the East Midlands, 64% of firms are unsure if they can continue trading, while in the West Midlands, the figure is 38%.

Access to funding is increasingly challenging, with 64% of East Midlands businesses struggling last year compared to 38% in the West Midlands.

Tax burdens are also a worry, with 48% in the East and 50% in the West unsure if they can pay their taxes this year.

Political uncertainty is causing delays in investment and work commissioning for 76% in the East and 62% in the West.

Concerns vary, with supply chain disruptions and insolvencies being key worries in the East, while high-interest rates and weak consumer demand are highlighted in the West.

Nathan Jones, restructuring advisory Partner at FRP in Leicester, said: “The results across the Midlands are concerning, but particularly so in the East. It’s possible that what we’re seeing here in terms of splits in trading optimism, and revenue and profitability expectations are the knock-on effects of the decision to cancel the eastern leg of HS2, which was particularly poorly received in the region.

“There are certainly a growing number of reasons for optimism, with green shoots beginning to show in the form of easing inflation and predicted interest rate cuts. Businesses in the region remain acutely aware of the threat of further supply chain disruption, however. Steps such as renegotiating contracts and shoring up local supply chains will be key for those looking to weather future headwinds.”

East Midlands firms plan to renegotiate contracts, while West Midlands firms aim to switch to cheaper suppliers.

Expectations for revenue and profitability differ, with fewer East Midlands firms expecting increases compared to their counterparts in the West Midlands.

Gemma Jones, financial advisory partner at FRP in Birmingham, said: “There are economic bright spots on the horizon, although challenging factors – like high-interest rates and heightened input costs – are likely to persist in the short-term. That being said, it’s encouraging to see that sentiment in the West Midlands is broadly in line with the national average, reflecting the resilience the region’s businesses have shown in recent years.

“Management teams should focus on maintaining an up-to-date 13-week rolling cashflow forecast, and make sure that they’re alive to risks within their supply chain and their customer base – reviewing credit control procedures and the financial strength of their partners can help helpful here. Building this foundation will help ensure they’re in the best possible position to capitalise on any new opportunities that lie ahead.”