UK construction market facing one of its most difficult periods since World War II

Press Release   •   Mar 04, 2013 10:04 GMT

After an initial 11% fall in output in 2009 following the onset of the financial crisis, the UK construction market grew by 8% in 2010 and by 2% in 2011, to be worth a market value of £195.6 billion in 2012.

The construction industry in the UK will not recover its pre-recession peak level of output until 2022, according to a recent study by an industry lobby group.

The bleak outlook follows "one of the most difficult periods since World War II", the Construction Skills Network report said.

The sector lost 60,000 jobs in 2012, in large part because of public spending cuts and construction employment is expected to continue to fall every year until 2016.

Previously the mainstay of the industry, the public sector has been suffering from major government expenditure cutbacks and aside from infrastructure it is unlikely to witness much growth before 2014. In contrast, main hopes of construction recovery lie with the private sector, notably housing, commercial (especially retail) and industrial.

Particularly worrying is the level of new orders, indicating a less than rosy future for output. Seasonally adjusted, the volume of new orders in Q2, 2012 were 8.5% below the level of the previous quarter, with infrastructure, private commercial and private industrial all well down. Only housing (both private and public) and public non-housing showed signs of growth.

Greater London will provide the only major bright spot over the coming five years, with most other parts of the country suffering continued contraction.

Activity in Wales would be boosted by the building of the Wylfra nuclear power plant, while the North East would enjoy a rebound from what has been a particularly nasty slump.

There were over 225,000 companies operating in the UK construction industry in 2012, 4% less than in 2006.

Balfour Beatty, the UK's largest construction group, has sustained growth during the hard times for the industry, mainly due to its impressive expansion abroad, at the same time cutting 650 staff from its 12,000-strong workforce in 2012 and closing 35 offices in the UK.

For more information on the UK construction market, see the latest research: UK Construction Market

Follow us on Twitter @CandMResearch issues news updates and report summaries covering all major industries and sectors. The service provides additional client monitoring and timely alerts to breaking industry and sector news leading the day's business headlines. News articles, written by our staff, contain additional analyst insight, providing value added insight for our readers. News updates and real-time alerts on newly-released market reports are also available from our Facebook page, Twitter feed @CandMResearch and RSS links. We also welcome inquiries from business journalists and the news media.