Decline in total value for new construction projects anticipated to continue for next nine months
The total value of new construction projects in the UK has fallen by 21% over the last year, with residential projects down by more than 30%.
The figures were reported in the November edition of the Glenigan Index, with Glenigan anticipating a continued weakening of the Index well into the first half of next year. UK construction starts are expected to remain below pre-credit crunch levels over the next two years.
“Construction in every part of the UK has been affected by the fallout from the credit crisis,” says Allan Wilén, Economics Director at Glenigan.
“While the Bank of England’s decision to slash the base rate may help rekindle confidence and money market liquidity in due course, we anticipate a further weakening in new project starts over the next nine months, which will continue to be a drag on industry output into 2010.”
Non-residential projects are down 20% year-on-year as a result of the sharp reduction in construction starts in the office and industrial sectors. The value of public sector construction starts, including education and health projects, has also weakened.
According to the Index, the public sector is likely to continue to struggle in the near future. However, investor confidence is expected to stabilise during 2009, while new health and education projects in the pipeline should result in a modest improvement within the sector from the third quarter of 2009.
The Glenigan Index tracks the monthly flow of projects starting on site, valued from £100 000 up to £100 million.
Electrical and Mechanical Contractor