In an issue as celebratory as this one, it’s rather a shame that we have to acknowledge the elephant in the drawing room. But as we go into the new year there’s no ignoring the uncertainty that’s surrounding the economy in the wake of the credit crunch.

In the past few months, construction has been able to shrug off this crisis, insulated as it is by order books, a boom in the Gulf, the Olympics and in the fullness of time, nuclear power. But it’s clear that the industry will not escape unscathed. The Construction Products Association has downgraded its output forecasts to 1% for each of the next three years; this time last year it was talking about a rate of 2.6% for 2008/09.

The immediate cause of the fall is the downturn in housing. But later on output in the commercial sector will weaken as developers put new work on hold. This gloom has been quantified by Savills, which recorded the biggest dip in commercial work since it started compiling figures in 2003. The credit crunch is likely to lead to insolvencies, according to a report by insurer Euler Hermes, as cash-flow problems reveal how overstretched firms have become (page 20). And then there’s the housing associations, which are no longer immune to economic cycles, as Ujima has shown.

Is there an upside to all this? Well, so far we’re talking about a slowing of growth rather than a recession, and that would at least cool the labour market and may ameliorate the sector’s unsustainable inflation rate. That said, don’t expect suppliers to be falling over themselves to slash prices: materials shortages are being caused by global demand, and energy costs are soaring. Housebuilders are another matter: it’s crunch time for them now. Let’s hope that the brutal letter that Taylor Wimpey sent to its suppliers decreeing a 5% cut in the price of new work is not a sign of things to come …

Denise Chevin, editor

The resurrection of Liverpool

Phil Redmond probably put it best when he said of his home town: “We’re a city that’s always been at the edge of everything.” Well, after all the haranguing and resignations and budget wranglings, Liverpool is at the centre of Europe. Tonight’s opening ceremony on St George’s Plateau will inaugurate the city’s reign as European Capital of Culture 2008. The dark days of the Toxteth riots are distant history, the flow of people desperate to escape the city has been staunched – and it’s not too far-fetched to claim some credit for this for the construction industry. As Redmond says, the capital of culture award is justified by the city’s buildings, old and new. From the mammoth Grosvenor project at Paradise Street and Wilkinson Eyre’s arena to the Liver birds that oversee it all from the peak of the Liver Building – we pay tribute to the people and projects that will shape Liverpool 2008.