We are presented daily with conflicting reports about the current condition of the UK construction industry and its future.
The latest Construction Trade Survey, which brings together information from contractors, product manufacturers, specialists and civil engineers, provides evidence that construction grew in the first quarter of 2011 compared to the weather-affected final quarter of last year – something to be positive about.
But at the same time, the latest output statistics for the UK construction industry show falls in output for all sectors in the first quarter of 2011, with the exception of infrastructure and non-housing repair maintenance. The Government has even suggested that the weakened construction industry is a contributing factor in the UK’s delayed economic recovery – not quite so positive.
A number of reasons have been put forward as to what the cause of the construction industry’s poor performance is. This is a lengthy debate in itself but perhaps the more pertinent question is what are the expectations for the year ahead?
Reports suggest that insolvencies in the construction sector have risen sharply due to public sector spending cuts. The number of construction firms in the UK that became insolvent in the first quarter of the year rose by 19% from the previous quarter to almost 1000. Recent GDP figures suggest building activity fell 5% and there are warnings that the industry could suffer further as the number of companies unable to pay their debts continues to rise. It seems clear that the fatal effects of the economic downturn continue to be felt throughout the UK construction industry.
But is this likely to improve in the coming year? The realistic answer is that no one is certain.
The UK construction industry remains volatile. Uncertainty continues around the lasting effects of public spending cuts and whether private sector construction work can pick up the slack left by the public sector and inject some hope into the industry.
But in Scotland, we are beginning to see a light at the end of the tunnel. The numbers of articles reporting on yet another insolvent construction company are almost matched by reports of forthcoming construction projects, such as:-
- the £1.76 million Princes Square refurbishment;
- the £45m revamp of Edinburgh’s old town; and
- the £140 million revamp of Union Terrace Gardens, Aberdeen;
Yes, there is no shying away from the tough times that those in the construction industry have faced, and continue to face. Times are hard, but the overall outlook must be that they are improving. Cranes and scaffolding are once again being erected in a town near you and this must herald a shift in the right direction.
There can be no doubt that the businesses emerging from the economic downturn remain bruised but the bandages are slowly being removed and the industry is learning to walk again.