18th May 2010

HobsonFord have today released a briefing paper on the UK construction market, titled: UK Construction 2010 and Beyond, Seeing the Opportunity. For a copy of this briefing paper click here.

“If you owe the bank £1,000, then you have a problem, but if you owe the bank a million pounds, then the bank has a problem,” so the saying goes. But what happens if you owe the bank a trillion pounds, or £1.4 trillion to be precise? That will be the size of UK national debt by 2015. The answer: the nation has a problem – we will all have to deal with the cost of the financial bail-out. Think of it like paying for a war, because the cost is on a similar scale.

So what does this mean for UK construction?

The public sector cuts will fall heavily on construction.
The UK has had a decade of strong growth in public investment, reaching an all-time high in 2009/10. This puts the expected cuts in sharp contrast to the past – spending has a long way to fall and we may not see the same level of public sector investment for a very long time.

How will this affect the economy and what will be the impact on construction?

Residential construction is a long-term investment opportunity.
There is an overwhelming political, economic and social case for investment in residential construction. The current level of supply is pitiful in relation to the needs of the nation and it will need significant investment over many years.

Will we see significant increases in housebuilding and will this be sustained?

Expect volatile markets
There will be significant changes in demand from one year to the next. The prospects for private sector investment have changed from one of complete collapse to tangible signs of growth. But markets are fickle and the experience of the past 16 years – of steady growth – is unlikely to be repeated in the near future. We should expect a more volatile and variable pattern to the economy.

Will private investment be sufficient to drive growth in construction?

Click here to see a full copy of this report.