• Six in ten construction SMEs to see Q1 turnover growth, Paragon Bank research finds
• Turnover growth boosts confidence for year ahead with 71% of sector SMEs set to invest in their businesses
• Costs of good and services still creating challenges for sector, but availability of goods improves

The UK’s construction SMEs are set to overcome economic challenges and are forecasting growth in 2023 thanks to increases in turnover, Paragon Bank research has found.

Carried out by Opinium, the research found that six in ten SMEs in the construction sector expected Q1 turnover to be higher than the same period in 2022. Of those firms surveyed, 12% forecast turnover to increase by over 10%, and a further 15% anticipate growth of between 5% and 10%.

The research also found that construction SMEs are expected on average to grow by 2.8% during 2023, with 52% of firms also expressing confidence in their future performance – compared with only 17% with doubts over the year ahead.

Confidence in their own business’ was found to be significantly higher than that for the UK economy (34%), but construction SMEs are more confident for the sector as a whole (57%).

Full time staffing levels are also set to increase in 2023 with over half (53%) of construction SMEs planning to increase their workforce compared with 10% planning on reductions.

Expectations for turnover growth and optimism within the sector come despite continued uncertainty over key operating factors. While the sector has found improvements to both the availability of goods and the payment terms offered by suppliers, construction SMEs currently face increased costs for goods and services and continued concerns over the ability of suppliers to meet their needs:

• Availability of goods (Improved 37% /Worsened 29%)
• Cost of goods and services (35% / 41%)
• Payment of terms of suppliers (33% / 21%)
• Suppliers meeting business needs (31% / 32%)

Uncertain economic conditions have though not stopped 69% construction SMEs seeking finance to invest in their operations, with firms set to spend on:

• IT technology: 22%
• Staff recruitment: 21%
• Machinery: 19%
• Staff training: 16%
• Commercial vehicles: 16%
• Improvements to premises: 13%
• Purchasing additional premises: 12%
• Research and development 11%

Commenting on the research findings Terry Lloyd, Paragon’s Head of Construction Finance, said: “Though doubts remain over the UK economy, the research clearly shows that construction SMEs are looking at 2023 with optimism. With expectations for turnover growth and plans for investment, our sector is putting in place the means to not only survive but thrive in the year ahead – and are ready to play a central role in the national economic recovery.”

He continued: “For construction SMEs to fulfil their plans and play their role, it is vital they are able to access the financing necessary to support them in the time ahead. Paragon was proud to partners, both new and old, through the challenges of the pandemic and we are committed to keep doing so through the current economic uncertainty – and we look forward to working with businesses to develop bespoke finance packages that support their optimism and growth ambitions.”

For further information contact:

Tom Frew
Media Relations Manger
Paragon
E: [email protected]
www.paragonbank.co.uk

Notes to editors:

Paragon Bank PLC a subsidiary of the Paragon Banking Group PLC which is a FTSE 250 company based in Solihull in the West Midlands. Established in 1985, Paragon Banking Group PLC has over £14 billion of assets under management, helping more than 340,000 customers to achieve their ambitions.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551.