Tight Trading and Lending Conditions Are Hindering Expansion İn The Construction İndustry

The UK Gross Domestic Product (GDP) has increased by only 0.2 per cent in the second quarter of 2011, following an increase of 0.5 per cent in the first quarter of 2011.

Construction output increased by 0.5 per cent in the second quarter, compared with a decrease of 3.4 per cent in the previous quarter. Government and other services showed zero growth, compared with a 1.1 per cent increase in the previous quarter.

Julia Evans, Chief Executive of NFB, said: “While any growth, however small, is to be welcomed at this time, it is still of concern to our members that tight trading and lending conditions have hindered expansion in the construction industry. Add to that the fact that public spending cuts are now biting, and lending has not appeared to have kept up with private sector demand, we are left with a significant gap in order books. It is not just about keeping turnovers ticking over – these companies need profits in order to survive.

We hope that the Government’s Construction Strategy will help to provide some glimmer of certainty in the form of longer term pipelines of work, in what is increasingly becoming a very worrying time for the industry. Particularly affected are the small and medium sized businesses which make up 90 per cent of the sector and contribute much to the economy. It is imperative therefore that public sector procurers do not lose sight of the ‘whole life’ value of projects in favour of ‘lowest cost’ in the drive for efficiency savings. That is a fallacy that could well have longer term impacts that could be damaging to the industry, as well as the economy.”

On a more encouraging note, looked at over the longer term, construction was one of the sectors that suffered the most in the recession and so has the most scope to grow in the recovery.