Economic pressures restrict growth in construction industry


Revenue generated from the construction contractor sector look set to shrink next year, despite an increase in the number of businesses working in this area.

Latest data shows that the number of construction contracting businesses increased by 1.6%, to 93,590 in 2022. This is almost 10 per cent higher than pre-pandemic levels — and is expected to rise by a further 1% in 2023. In terms of number of businesses the sector has grown consistently since 2013.

However, analysis by tax specialist Rift Tax Revenues shows that the size of the total sector, based on revenues, peaked in 2020 at £177.4bn. Since then the market has shrunk, falling by 18% in 2021 largely due to complications caused by the pandemic. 

While there was some recovery in 2022, the overall size of the market is still 2% below the previous peak — at £173.8bn.

Rift Tax Refunds says that with the economic landscape remaining an uncertain one, it expects to see a marginal 1.3% reduction in market size this year, with the sector dropping to £171.6bn in 2023. 

Rift Tax Refunds managing director Bradley Post says: “Construction contractors provide the backbone for the UK construction industry so it’s hardly surprising that the number of businesses in operation has climbed over the last decade. 

“However, while this is positive in itself, total revenues generated have been less consistent due to the fact that the sector has been susceptible to the wider impact of the pandemic and, more recently, a struggling economy.

“While the sector looks in fairly good shape, it’s yet to return to its pre-pandemic best and, in fact, we expect total revenues to contract slightly this year.”

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