Construction Recession Hits Britain
Britain, as most construction remain voters feared, has now hit tipping point due to Brexit. This year’s second quarter has produced a decrease in both the output of house building and the infrastructure. Some economists are predicting that this is the first wave of what they believe will be a Tsunami of industries suffering economic downturns which could hit towards the turn of the New Year. The construction sector fell by 0.7pc for the April to June period. Whilst this decrease is not as big as the first quarter, 1.1pc decrease, it is 1.4pc lower in comparison to the same period last year.
The survey for National statistics recorded a ‘slow down’ in the few months before Brexit as less projects were commissioned or commenced. The downturn shows a lack of confidence in the market and subsequently housing prices have taken a small hit. The belief is that this slip will be part of a greater fall over the coming years. The balance is being altered by the uncertainty around the UK’s departure from the European Union. Investments are being put on hold until after the departure negotiations as investors seek to the enlightened as to the particulars of the UK’s future trade links among other policies.
The construction recession is likely an indicator that the UK’s economy might be heading towards recession. The housing sector wasn’t the biggest construction sector that has been hit. This is because the infrastructure sector plummeted in comparison as it fell 3.7pc. However the fall of maintenance on existing buildings was not hit as hard as it fell by 0.5pc.
Could this downturn have a silver lining?
Scape, a public sector firm, has indicated that this downturn may not be as bad as people fear. They believe that the slowdown could allow the government to commence some of their bigger building plans. They claim that important projects such as Northern Powerhouse should still be strongly held on the agendas they are pivotal for creating a positive benefit to the economy especially when there such great uncertainty surrounding the UK.
The UK is not the only part of the ‘Eurozone’ to be suffering. The leading economies of France and Italy have stuttered as they remained equal to their past GDP whereas the economically powerhouse of Germany saw GDP decrease in quite dramatic fashion. However the Euro as a whole increased its GDP by 0.3pc for the April-June period.
Uncertain times breed lack of confidence and it is important that the UK carry out their negotiations for the departure of the EU with as much haste as possible to prevent the country falling into wide scale recession. The die has been cast and now it is important that the Government pushes ahead with their new agenda whatever it might be.