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Every fourth Danish construction company threatened with Bankruptcy Wednesday, 28 December 2011
Every fourth of Danish Construction Company is threatened to run aground and to come face to face with bankruptcy. Already, both declining equity and a negative annual result are sending deafening signals which authorities are urged to take seriously.
The force behind this dismal outlook comes from a new study from credit research company Experian.
“Regardless of how much activity is currently going on, it is a fact that liquidity is still under pressure in the construction sector, and even with an order improvement in the short term it is a stressful business,” the chief economist at Håndværksrådet, Jacob Thiel said and hopes for a mild winter where construction companies could have have something to do.
AdvertisementThe Danish Construction Association is not surprised by, the study conclusions carried out by Experian. For construction companies, the economic crisis continues to hit hard on their economy.
“Companies are pressed at the moment and in a situation where it is also difficult for them to borrow money, it make it extra difficult times for businesses,” says senior economist Finn Bo Frandsen from Danish Construction Association.
The study comes just three weeks after an analysis by the accounting firm Deloitte also showed that one in four construction companies are facing bankruptcy.
But the core of all this is that the Danish real estate sector is in crisis. The sector that grew too big, sucking in lost of money in homes that were over valued saw its bubble bust and house prices started falling like a piece of rock.
Some Danish banks went bust just because they had given out loans for house purchases and how the equity on those home have crossed the minus line to negative. Added to the weak Danish economy at the moment and lack of credit nobody is interested in buying a house in Denmark now.
By Scancomark.se Team
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