Has the road to recovery begun?
Published: 24 July, 2013
The UK construction sector finally seems to be turning a corner, with new projects starting to rise in almost every part of the country, according to the latest RICS construction market survey.
Since the start of the downturn in 2007, the amount of construction going ahead across the country has dropped considerably and the sector has suffered substantially as a result. Since the start of 2013, however, activity has slowly begun to pick up. During the second quarter of the year, a net balance of 21% more surveyors reported rises in workloads, the most positive reading in over six years. While consistently falling activity has meant that projects are still thin on the ground, this upturn may suggest that the worst could now be over for the sector.
Encouragingly, this more positive mood is expected to become stronger over the coming 12 months with 59% more respondents predicting workloads continuing to rise rather than fall. With every pound spent on construction in the UK generating almost three pounds of wider economic growth, this will undoubtedly be seen as good news for UK companies.
Across the country, activity saw the biggest rise in London, the South East and the Midlands. Northern Ireland registered the lowest reading (net balance –4%), yet this still represents a considerable improvement on recent years.
Looking ahead, it is also positive news for profits and, consequentially, employment prospects in the construction sector, with both registering a very positive net balance reading of 34%.
Simon Rubinsohn, RICS chief economist, said: “It is clearly good news that the amount of construction taking place across the country seems to have turned a corner. But this modest improvement comes after a long period of contraction and many businesses in the sector are still struggling to keep their heads above water.
“Securing finance for development is still a big challenge and, despite the government’s attempt to revamp the planning system, the feedback we are getting suggests that this issue also remains a major obstacle to getting projects underway.”