Construction Companies Remain Cautious Over Future Growth

UK construction enterprises are rather wary about their long-term growth prospects, according to research from Santander Corporate Banking.

Directors of companies with annual revenues of up to £20m are expecting, on average, to raise their turnover by an average of 74 percent in the next five years, compared with the national average of 104 percent . It’s only the retail industry that appears pessimistic, projecting only a 52 percent average turnover during the same time frame.

For the time being, construction firms are preoccupied with merely surviving rather than actively pursuing expansion. The survival of the company is the top objective for 52% of directors, compared to 30% who say they are focusing on organic growth.

Just over half of enterprises (53 percent) view the difficult market environment as the greatest threat to the growth prospects of construction companies. One out of every five (20 percent) construction company directors said that finding and keeping good employees is still a major challenge. Yet with many businesses remaining highly focused on decreasing company costs as a significant priority (37 percent compared to 29 percent overall), such a problem is unlikely to resolved in this sector any time soon.

Steve Pateman, head of Santander corporate and business banking, said: “Many businesses are clearly remaining cautious in the current tough trading environment but it’s encouraging to see that in the longer-term they are more positive about their prospects.

“These companies are critical to the country’s economic recovery, and their belief in their own growth potential is encouraging. We at Santander are dedicated to assisting forward-thinking businesses in overcoming the obstacles that stand in their way of reaching their full potential.

Manufacturers are most bullish about their future, expecting to rise by an average of 138 percent in the next five years. A close second are wholesalers (up 108%), financial services (108%), and construction companies (74%), all of which forecast to grow at a slower rate than retailers (up 52%) during the same time period.

Smaller companies are most confident about their future prospects with the average company with a turnover of less than £500,000 expecting to grow their business three-fold (by 202 percent ) over the next five years. However, larger companies also have aggressive expansion plans, with corporations turning over between £5million and £20million expecting to increase by an average of 86 percent .

Businesses in Scotland and Northern the UK are most confident about their growth prospects over the next five years, expecting to increase by 194 percent on average. Businesses in the South East (136 percent ) and South Wales and the South West (123 percent ) also exhibit considerable levels of optimism. However, businesses in the North West, West Midlands and North Wales are less enthusiastic, expecting to increase by roughly 50 percent over the same period.

Last Updated on December 29, 2021


Author: Indra Gupta

Indra is an in-house writer with a love of Newcastle United and all things sustainable.

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