Sunday, May 13, 2012

How To Recession Is Affecting The UK Construction Industry

The developed world is aware of the calamitous effect of the credit crunch. The impact was then worsened by one of deepest recessions in recent memory, verging, in the view of many commentators, on a depression. Just when certain economists and politicians in the United Kingdom dared to speak about the "green shoots of growth" we were told that the country was in a state of "double-dip" recession. This was a crushing blow to the people of the nation and the majority of workers, not the least amongst which were those involved in the construction industry. A brief comparison of the state of the building industry, before and after the impact of the world economic crisis, will give some idea of the effect of all of this upon this one particularly vital sector of the economic infrastructure.

In the last quarter of 2009 the building industry in the United Kingdom provided jobs for somewhere in the region of  2,.200,000 workers. There then existed almost 200,000 construction concerns in Great Britain. Of these companies, approximately 75,000 employed one single employee, whilst 62 companies employed more than 1,200. New orders received directly from the private sector were valued at excess of £18 million, whilst orders from the public sector were valued at more £15 million.Although the effects of the credit crunch had already began to bite by then, these figures nevertheless bear a stark and bitter contrast to the most recent statistics on the performance of the industry.

The most recent report from The office of National Statistics, on the performance of the construction industry in the UK shows that :

a)  Compared to the first quarter of  2011, new orders fell by over 16% in the final quarter;
b)  Never since 1980, have orders for new building contracts been so low;
c)  Compared to the equivalent period in 2010, new orders fell by over 23  %;
d)  There was only one single building industry sector  -  the private industrial sector - that experienced growth between the first two quarters of the year.

The implications of these statistics regarding new orders has been immensely detrimental to the construction industry in the UK in general and to workers hose income was reliant on that industry in particular. The tried and tested reality is that construction can provide employment for over two million people in the UK. The tax revenues that can be accumulated from a booming construction sector represent a massive boost to the economy of the country. We should all hope that the government will make it one of their imperatives to take every possible measure to assist in the rejuvenation of the building industry and introduce proactive policies with a view to returning the construction industry to the position of strength that it enjoyed before the onset of the financial crisis.

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