The past five years have seen hard times for the U.K. construction industry and the forecast for the near future would appear to be bleak, although there may be cause for a cautious optimism
Just in case you haven’t heard the news, we’re in the midst of a world wide recession. Or possibly a depression, depending on whom you talk to. Unless one is a member of a primitive tribal society, no industry, business sector or individual remains unaffected.
Britain is experiencing it’s first “double dip” recession since the 1970’s according to the Office for National Statistics. A recession is defined as the GDP falling for two fiscal quarters in a row, and this has happened twice since 2008. After experiencing a long period of steady and reliable growth between 1995 and 2006 with an average growth rate of 1.6 percent, U.K. construction suffered a serious bloody nose in December of 2008 when it experienced it’s biggest decline since they began keeping records, mostly as a result of a lack of demand for new housing. Things haven’t gotten better since then. The U.K. construction industry has seen losses every year, with the Construction Products Association reporting in October of 2011 that since the recession began the industry had lost over £32bn in business. Chief among the factors cited in the continuing sluggishness in the industry are a lack of private sector funding and the difficulty of securing credit.
The current situation for Britain’s construction industry doesn’t look much better with construction dropping another 3% in the first quarter of 2012 according to the ONS. The CPA doesn’t expect any improvement until at least 2014. Furthermore it is estimated that another £10bn of public funding will be cut from construction through 2013.
Gloomy and depressing? Maybe, but no need to go jumping out a window just yet. Even the most pessimistic industry analysts and economists concede that things will have to get better eventually. What goes down sooner or later has to come up, right?
One bright spot for the industry is London, which will see construction begin on a new cross rail network, with Transport for London estimating the creation of 7,000 new jobs. Work is slated to continue through 2017. And the city’s aging infrastructure promises continuing development for the foreseeable future, not in small measure because of preparations for the upcoming summer Olympic Games in July of 2012.
Speaking of the Olympics, a lot of analysts and politicians seem to be crossing their fingers in hopes that the revenue generated from the thousands of tourists, athletes and media thronging to the city might, just might, be enough to drag the slumping economy out of its doldrums. It seems a bit of an ethereal hope, but who knows?
All things considered, it looks like the U.K. construction industry is in for at least a few more years of struggle. But those in the industry can at least take heart in the fact that they aren’t suffering alone.