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Construction companies in trouble

Constant delays in the paying of invoices by creditors and increasing difficulties in getting bank loans are suffocating Portuguese construction companies.

According to the latest report produced by the Portuguese Construction Industry and Public Works Federation (Federação Portuguesa da Indústria de Construção e Obras Públicas – Fepicop), many companies neither have the money nor the demand to remain in business.

Apart from a sharp fall in the amount of credit granted to companies (it fell 3.4% in the first five months of the year), construction firms have also indicated an increase in the amount of bad debts which grew by 2% from 6.9% to 8.9%.

But the most difficult aspect for construction companies has been the considerable cut back by the banks in offering residential housing mortgages.  By the end of May, the number of home loans granted by the banks plummeted 34%.

According to its report, Fepicop believes the situation, which has become considerably worse in recent months, “is fairly worrying” in terms of “getting bank credit for projects” and the “increase in the cost of taking out credit” and the “amount of liquid capital or collateral” the banks require before making any loans.