Atradius Market Monitor Construction Sector

Elevated credit risk remains

There are certain issues and patterns that construction industries have in common in any country, regardless of their performance in individual markets: n high level of competition, low profit margins, the fact that public buyers generally pay late and that there is a higher than average proportion of business failures. Long payment duration and cash flow problems/weak financials of smaller construction players are an issue in almost every market. After the major shake-up of the global construction industry caused by the 2008 financial crisis a return to economic normalcy has become visible, however, the rebound in some countries like Belgium, France, Italy and Spain remains modest compared to pre-crisis levels, as the decline in building activity during the recession was very steep. The  ecent sudden failure of a major British construction company highlights again the elevated credit risk level for  usinesses in the construction industry, where thousands of smaller businesses are typically at the back of the queue for payment.