Procurement · 24 April 2017

Small building firms enjoy growth despite rising costs

house builder
More than half of small construction firms expect business to improve further in the coming months

Britain’s small building firms have experienced rising workloads so far this year, despite mounting concern over the costs of labour and material.

From January to April 2017, small UK construction business owners have seen workloads increase at the fastest rate since before the Brexit vote on 23 June last year, according to the Federation of Master Builders (FMB).

Findings from the FMB’s latest State of Trade survey – the largest quarterly assessment of the UK construction sector – revealed that over 50 per cent of small building firms were anticipating an increase in work in the next quarter, with just 5 per cent predicting a drop in activity.

Commenting on the progress made by small firms in the sector, FMB chief executive, Brian Berry, said: “The first three months of 2017 proved to be very positive for small construction firms, which reported strong growth. Workloads rose in every part of the UK, with particularly positive results in the devolved nations.”

According to the survey, 85 per cent of UK builders believed the costs of their material would rise in the next three months, caused by a depreciating pound. Meanwhile, some 58 per cent of small construction businesses have struggled to find carpenters to work alongside with on projects in 2017 – a new post-Brexit low.

Berry added: “Although only 20 per cent of construction products and materials used in the UK are imported, the depreciation of sterling since the referendum has seen material prices shoot up –  this pressure on margins looks set to continue.

“The combined effects of rising material costs and the ever-worsening construction skills crisis will therefore be reason enough for smaller construction firms to be cautious in their optimism.

“If consumer confidence is shaken by the impending snap general election and the triggering of Article 50, there are plenty of potential pitfalls for builders to navigate.”

Government boosts funding for small house builders

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ABOUT THE EXPERT

Fred Heritage is deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London. He previously worked as a reporter at Global Trade Review magazine.

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