Press Room
UK construction companies hit hard by budget announcement
On today's Budget statement and issues impacting the
construction industry, Phil Westerman, Head of Construction
says:
"The tax and VAT hike announced today will add to the distress
of an already fragile recovery in the construction sector. As
consumers now face an increase to their tax bill, coupled with a
rise in VAT, this will undoubtedly lead to a fall in the confidence
they need to make larger scale purchases. Many will question if now
is the right time to buy; whether they have the funds to do so and
whether their jobs are secure.
"Another fear of a VAT rise is that it will lead to more cash
strapped consumers resorting to cash-in-hand payments to builders
for home improvement, or smaller projects to avoid paying the
higher rate of VAT. This is a practice that could lead to the
unfortunate promotion of a cowboy culture, which we certainly don’t
want to see increase."
"The past few years have seen the construction sector experience
a tumultuous period where it has witnessed falls in volumes and
prices, and rises in redundancies and business failures. With
public sector spending cuts well on the way, it could mean that
many construction contracts with larger contractors - including
high value PFI agreements for schools, roads and hospitals - will
be cancelled.
"Given that the majority of public sector construction contracts
are with bigger players, smaller building companies will face a
further challenge as they see larger builders vying for a slice of
the cake they would not normally target."
- Ends -
For further information, please contact:
Stephanie Aneto, Grant Thornton press office. Tel: 020 7728 2940
or email: stephanie.aneto@gtuk.com