By Dr. Sarath Obeysekera

https://www.telegraph.co.uk/business/2026/05/25/hundreds-construction-firms-risk-collapse-reeves

Britain, one of the world’s most advanced economies, is facing an alarming wave of construction company failures. Reports now warn that hundreds of UK construction firms are at risk of collapse due to rising fuel prices, high interest rates, labour shortages, delayed payments and geopolitical instability.  

The situation has become so severe that construction insolvencies are now among the highest of any industry in the United Kingdom. Thousands of firms have either collapsed or are struggling to survive.  

For Sri Lanka, this is not merely foreign news. It is a warning signal.

The question we must ask is:

Can Sri Lanka adapt some of the British methods to stabilize the construction sector — and how practical would that be under our economic conditions?

Britain’s Problem: Too Much Cost, Too Little Cash Flow

The British construction sector suffers from several interconnected problems:

• High energy prices
• Rising steel and cement costs
• Delayed government projects
• Expensive bank loans
• Labour shortages
• Supply chain disruptions
• Excessive dependence on private developers

Even giant firms with strong order books have collapsed because they lacked cash flow to survive rising costs.  

Ironically, Britain still desperately needs houses, roads and infrastructure. Demand exists — but the financial system surrounding construction has weakened.

This sounds very familiar to Sri Lanka.

Sri Lanka Is Already Entering a Similar Trap

Today in Sri Lanka:

• Cement prices remain volatile
• Sand, metal and transport costs have skyrocketed
• Interest rates have damaged the housing market
• Contractors wait months for payments
• Government projects move slowly
• Skilled workers migrate abroad
• Small contractors are collapsing quietly

A medium-scale house that cost Rs. 8–10 million a few years ago may now cost double.

Many families have stopped building halfway.

Even experienced contractors now avoid fixed-price contracts because inflation destroys profit margins.

What Methods Can Sri Lanka Adapt?

1. Public Infrastructure as an Economic Engine

Britain historically used mega infrastructure projects to stimulate the economy:

• railways,
• tunnels,
• housing schemes,
• ports,
• highways.

Sri Lanka must also think beyond short-term politics.

Large projects like:

• Trincomalee industrial zones,
• offshore energy facilities,
• marine engineering yards,
• railway modernization,
• flood mitigation systems,
• affordable housing,

can create thousands of jobs while stimulating steel, cement, transport and engineering industries.

Construction is not merely an expense.

It is an economic multiplier.

2. Move Towards Industrialized Construction

Britain increasingly promotes:

• prefabricated housing,
• modular construction,
• steel frame systems,
• factory-produced components.

Sri Lanka still largely depends on labour-intensive brick-and-mortar methods.

This is becoming economically unsustainable.

Instead of carrying sand in buckets under hot sun, Sri Lanka should encourage:

• prefabricated wall systems,
• light gauge steel buildings,
• modular apartments,
• precast concrete systems.

This reduces:

• labour dependence,
• material wastage,
• project delays.

3. Vocational Training for Real Industry

One major British weakness today is labour shortage.

Sri Lanka still has young people seeking employment.

But unfortunately many vocational programs focus mainly on:

• beauty culture,
• cake decoration,
• low-paying service jobs.

We urgently need technical training for:

• welding,
• pipe fitting,
• marine fabrication,
• CNC machining,
• offshore engineering,
• industrial electrical systems,
• NDT inspection,
• ship repair,
• modular construction systems.

Countries that build infrastructure need skilled technicians — not merely certificate holders.

4. Government Payment Discipline

Many UK contractors collapsed because payments were delayed through long subcontract chains.  

Sri Lanka suffers even more severely from this disease.

Government agencies sometimes delay payments for months or years.

A contractor who completes a road or drainage system cannot survive if payments are trapped in bureaucracy.

If Sri Lanka wants a healthy construction sector:

• certified bills must be paid quickly,
• corruption must reduce,
• procurement systems must modernize.

Cash flow is oxygen for contractors.

5. Reduce Dependence on Imported Materials

Britain suffers partly due to imported energy and material costs.

Sri Lanka also imports:

• steel,
• fuel,
• machinery,
• many construction chemicals.

We should encourage:

• local steel fabrication,
• recycling industries,
• alternative building materials,
• engineered timber,
• local marine industry support.

Not every building needs expensive reinforced concrete.

But Is It Practical for Sri Lanka?

Partially yes.

But there are major obstacles.

The reality is:

Sri Lanka lacks:

• long-term planning,
• industrial consistency,
• stable policy,
• low-cost financing.

Projects often change with governments.

Investors fear uncertainty.

Technical planning is replaced by political slogans.

Without stable national policy, no construction revolution can succeed.

The Bigger Lesson

Britain’s crisis teaches us something important:

Even rich countries struggle when:

• productivity falls,
• debt rises,
• costs escalate,
• industry weakens.

Sri Lanka cannot simply depend on:

• tourism,
• remittances,
• imports,
• small service industries.

We must rebuild productive sectors:

• construction,
• marine engineering,
• manufacturing,
• logistics,
• ship repair,
• industrial exports.

Otherwise we risk becoming only a consumer economy dependent on foreign borrowing.

A Final Thought for Sri Lanka

Instead of training our youth only for overseas domestic labour or low-value service jobs, Sri Lanka should prepare for the next industrial wave in the Indian Ocean region.

India is now planning massive shipyards and maritime industrial zones.

Middle Eastern energy projects are expanding.

Offshore industries are growing.

If Sri Lanka acts intelligently, Trincomalee, Colombo and other ports can become technical and industrial hubs supporting the wider region.

But if we continue with fragmented thinking, rising costs and delayed projects, we too may witness the silent collapse of our own construction sector — just as Britain is experiencing today.

Dr Sarath Obeysekera