Government funding steadies construction

Published:  09 July, 2009

LONDON: Government funding has finally begun to filter through to project starts.

Market analysts, Glenigan, said in its June Index that a rise in education, health and social housing projects starting on site have helped steady the Index, cutting the year-on-year decline to 20%.

The report said: "In contrast the becalmed housing market and weak corporate investment continue to depress the flow of private sector projects. Nevertheless, the latest Index data supports Glenigan's forecast for an overall stabilisation in project starts during the second half of the year, albeit at a low level."

The slump in private sector work has inflicted widespread declines in construction project starts across the UK during the three months to June, with only Scotland and Northern Ireland bucking the trend thanks to increases in public sector work, the report said.

"The sharpest falls have been in the West Midlands and the North East and South West of England. A divergence has emerged in the housing sectors' fortunes, with a rise in social housing work in sharp contrast to the continued woes of the private sector. The slump in the wider housing market continues to depress private housing project starts," said Glenigan.

"Developers remain focused on completing and securing sales on existing projects, rather than opening new sites. In contrast, the flow of new social housing schemes has picked up over the last quarter, suggesting promised government funding is now filtering through," it stated.

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