Construction concerns
Phil Westerman, Head of Construction at Grant Thornton, had this to say about the impact of today’s Emergency Budget on the construction sector:
“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.”
