Impact of the Recession on Construction Contractors

THE IMPACT OF THE GLOBAL FINANCIAL CRISIS ON THE CONSTRUCTION INDUSTRY JANUARY 2009 INTRODUCTION The current crisis in the world’s financial system has left the construction industry facing its toughest challenges for a generation. Salaries are falling; job cuts are predicted to reach 400,000 in England alone; and the impacts look set to get much worse before they get better. No country is immune from the impact of this and the UK, and much of the rest of the world, is already in, or about to enter a recession. Even buoyant construction markets such as the United Arab Emirates (UAE) are starting to feel the effect, with construction growth rate expected to slow from 20% to 15% in 2009 (Al Mal Capital). The United Nations (UN)†¦show more content†¦The fiscal mitigation measures that were recently announced by the Chancellor (Pre-budget statement, November 2008) were not sufficient to address the underlying loss of confidence facing all UK businesses (and people). More innovative ways could be investigated by Government to help the industry survive, such as providing credit insurance; relaxing bonding requirements on public projects; setting up project bank accounts; and providing tax breaks/concessions for sustainable construction RD. At present, the latter has effectively ground to a halt largely as a result of the deeply entrenched uncertainty that abound. Jobs Loss of Skills Almost 400,000 jobs in the construction sector in England could be lost over the next two years (assuming GDP shrinks by 2.2% in 2009 and rises by 0.75% in 2010). It is predicted that the worst affected area will be London, where 23% of workers are expected to be made redundant (Public and Corporate Economic Consultants for the Local Government Association). On the other hand, Eastern Europeans are responding to the downturn in the market by returning home, and this has eased the severity of the job situation in many instances. Given the forecasts for construction output in 2009, it could be assumed that jobs in the public sector may offer more security than those in the private sector. This reinforces the need for Government to establish how an accelerated public spending package will beShow MoreRelatedPestle Analysis Construction1034 Words   |  5 PagesJohn O’Donnell Gallagher Construction and Development are based in north London. They are a property development and refurbishment company. They have been in the construction industry for about twenty five years. They have a workforce of twenty directly employed and about fifty self employed workers at the moment. 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