The challenge of economic recovery facing the UK government just got tougher

How will the latest eurozone crisis impact on you? You can probably think of a pretty long list - higher interest rates, increased public spending cuts, client distress, lending difficulties and the banks behaving like hooligans again. But what will it do to government policy? This week saw French bank Dexia asking for a bailout as European politicians scrambled to lay down anti-contagion measures, all the time trying to assess the enormity of the situation. Meanwhile, back in Blighty, our government announced grandly that the UK’s economy is, actually, still growing - albeit not as fast as it would have liked - and that, as a result, it will not be scaling back its deficit reduction plan.

The threat for all is that the ongoing Eurozone crisis will drag the industry back to its 2007/08 nadir

The UK government will clearly struggle to mitigate the risk to the economy imposed by its major European trading partners - but for now it seems loath to relax its rhetoric on growth and is pressing ahead with radical housing and planning reforms in the face of vocal opposition. It’s a high-stakes strategy - but construction companies on the ground are seeing signs of green shoots. Our Top 200 consultants’ survey reports that staff numbers and salaries are increasing year on year. And while there are still contractors restructuring for position the bulk of the cost cutting within the built environment appears to have been done already. But can the fragile market conditions and political will survive to propel us towards recovery?

General sentiment accepts that growth in UK construction is likely to be non-existent for at least two years, with most firms planning to continue to diversify abroad or into transport, green or energy markets. After that time, the hope is that the private sector will recover sufficiently to fill the void and that businesses are both suitably positioned and agile enough to chase new money as and when it appears. But as the opportunities become clear for the strongest players in a distressed marketplace, the threat for all is that the ongoing eurozone crisis will drag the industry back to its 2007/08 nadir, just when it begins to see a way to the surface.     

Tom Broughton, brand director

Let’s get on with it

The prominent focus given to housing policy at the Conservative Party Conference this week, with the government announcing initiatives to deliver 200,000 extra homes, will be welcomed by a sector that is still limping along at just half the levels of its output four years ago. But ministers’ admissions that councils will be given a transition period before becoming subject to the controversial “proposal for sustainable development” is a worrying sign that efforts to generate a long-term market recovery could be dashed before it’s even begun. Councils have had years to put in place the local development plans that would block the presumption in favour in their areas. Any transition period must not allow councils to drag their feet for much longer - if interim arrangements apply so widely that the government’s reforms cannot take effect, any other measures towards recovery will be undermined. Then it would be all too easy for a future government to repeal the reforms altogether, leading to another period of paralysis.