Commenting on the GDP figures for Scotland for the third quarter of 2010, published yesterday (19 January) by Scotland’s Chief Statistician, Scottish Building Federation chief executive Michael Levack said that the growth in output witnessed for the construction sector during that period is likely to represent a ‘high tide mark for the industry for some time to come’.
He also expressed concern about new figures on corporate insolvencies in Scotland which show a dramatic increase in the number of building firms going out of business.
The latest statistics show that the construction sector grew by 6.2% between July and September last year. However, separate figures published by the Accountant in Bankruptcy show corporate insolvencies up 24% in the third quarter of 2010 compared to the same quarter of 2009. (The Accountant in Bankruptcy is a Scottish government post responsible for administering bankruptcies and recording insolvencies in Scotland.) According to recent figures from the UK insolvency service, this trend includes a doubling in the number of construction firms forced into compulsory liquidation between July and September 2010 compared to the third quarter of 2009.
Mr Levack said: “The latest GDP figures for Scotland suggest there was a big push to complete work during the third quarter of 2010 to make up for lost time during the severe weather conditions witnessed the previous winter. They also demonstrate some residual benefit to the industry from the capital investment accelerated into the 2009/10 Scottish budget.
“However, the latest insolvency figures for Scotland tell a different story and illustrate the increasingly tough trading conditions being faced by many building firms as we moved into the latter months of last year. All indications from our membership are that they are extremely anxious about the outlook for 2011.
“As such, I am afraid that the growth in output from construction seen in the middle of last year will be a high tide mark for the industry for some time to come. Furthermore, we are seeing an increasing number of construction companies being forced into bankruptcy. In the absence of additional public investment to generate new work, this worrying trend looks set to continue.
“No-one should allow themselves to be misled by these latest GDP figures into thinking that the construction industry is doing well. All evidence on the ground is that conditions remain nothing other than very difficult – and the accompanying insolvency statistics bear this out.”
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