UK construction firms face 75% profitability drop

UK construction firms face a 75% fall in profitability and a 71% drop in turnover in 2009 compared to the previous year, according to a survey by accountancy firm Grant Thornton.

The prediction forms part of Grant Thornton's International Business Report (IBR), which spoke to 7,200 businesses in 36 countries.

Clare Hartnell, head of property and construction at Grant Thornton said: "Profitability and turnover within the construction and property sector are significantly driven by sales and market value; 2008 was a turbulent year as credit dried up and confidence plummeted causing house prices and the number of properties sold to fall sharply.

"The decline in the residential market consequently has had a knock-on-effect on the construction sector where problems have been exacerbated by huge debts as many proposed developments have been put on hold."

"2009 is set to be a trying year to say the least. Part of the reason for this is the current state of the economy. Lack of available credit will have an adverse effect on the ailing construction and property sector,"

Other sectors set to see a decline are: selling prices (43%), investment in plant & machinery (27%), and investment in new buildings (31%).