Construction BUSINESS

In a significant revelation, recent data highlights a technical recession in the UK, with a decline in construction output, prompting warnings from representatives in the civil engineering and construction sectors. The technical recession officially declared with negative growth in two consecutive quarters in 2023, resulted in a 0.1% contraction in GDP from July to September and a further 0.3% shrinkage from October to December. The Office for National Statistics (ONS) notes that this marks the “mildest start” to a recession since at least the 1970s.

Simultaneously, the ONS reports a 1.3% decrease in construction output from October to December 2023. This decline is attributed solely to a 5.0% fall in new work, while repair and maintenance experienced a contrasting 4.0% increase. Economists had previously warned about potential recessionary impacts on the construction industry, citing project delays and cancellations, such as the northern leg of HS2, which has raised concerns about the government’s commitment to infrastructure spending.

Marie-Claude Hemming, Director of Operations at the Civil Engineering Contractors Association (Ceca), underscores the consequences of budget cuts, pointing to the highest number of construction firms falling into insolvency since the Global Financial Crisis. She calls for “strong backing” for the construction industry to ensure economic recovery, job creation, and the development of crucial infrastructure. NBS CEO Russell Haworth expresses cautious optimism, citing a forecast predicting an 8% gradual growth in the industry in the latter half of 2024, while the Building Cost Information Service (BCIS) anticipates a 5% fall in new work output in 2024, suggesting the industry may be in a recession due to persistent low growth. Chancellor Jeremy Hunt acknowledges economic challenges, emphasizing the government’s commitment to combat high inflation, while Shadow Chancellor Rachel Reeves criticizes the government’s economic handling, attributing the recession to Chancellor Rishi Sunak. Amid economic uncertainties, industry leaders advocate for sustained investment, highlighting the government’s crucial role in steering the nation towards a resilient and prosperous future.

Source: New Civil Engineer