Doom to boom?
FROM DOOM TO BOOM?
It won’t be long before Boris shifts the focus from the Scientists to the Economists and we emerge from ‘sleep mode’.
We have been scouring the media for articles relating to economic recovery and, in particular, how that might impact the construction industry.
There is some good stuff hidden amongst all the noise, in particular Simon Rawlinson’s post on planning for long term recovery.
Overall, the early signs indicate a positive approach and a radical shift in economic policy with Economists (globally) now seeing big spending as the only answer:
‘…Measures put in place by the UK Treasury show the Economists believe the very sharp plunge in the size of the economy can be followed by a bounce back…’
‘…The German government is to spend an additional €122.5bn this year to counter the slump caused by the coronavirus as it rips up the fiscal rulebook that has guided Europe’s largest economy for a decade…’
And yesterday, the ECB helped continue US equity gains by announcing that it wouldn’t apply the normal cap of ‘only’ buying one third of a Eurozone nation’s outstanding debt when it comes to the pandemic relief programme.
So, we are joining Simon Rawlinson’s call, ‘…making the case to keep building early, clearly and loudly, even in the midst of a crisis, I would like to think that, as an industry, we can help the UK to keep investing in our future, even as it seems so uncertain.’
An increase in construction investment could be a silver lining to the Coronavirus cloud future for construction in the UK (and globally).
WHY INVEST IN CONSTRUCTION?
‘…Economics shows that millions of people scarred by unemployment has long lasting impact…’
Unfortunately, unemployment will increase. Although the government is doing its best to minimise this, there will be a need to create new jobs – and very quickly.
Picking up on Simon’s article again, unlike the construction crisis in 2008, this time the opportunities and challenges are very different. Borrowing is cheap and is politically popular. Investing in construction will deliver valuable assets as well as sustaining important businesses. Construction is seen as part of the solution.
There are ‘shovel-ready’ projects across the UK that will need additional labour and cross-training is feasible. Already, China has started this policy:
March 21 (Xinhua) — China is speeding up construction on major infrastructure projects to mitigate the economic impact of the novel coronavirus epidemic.
The construction of almost 10,000 key projects restarted this week!
In the recent Budget we heard the Chancellor’s call to action on ‘getting Britain building’ and commitment to spend over £600bn on infrastructure over the next five years:
The government have an ambitious plan to invest in infrastructure and address regional disparities. By the end of parliament, public sector net investment will be triple the average over the last 40 years. In total, £640 billion of gross capital investment will be provided for roads, railways, communications, schools, hospitals, and power networks across the UK by 2024/25.
The Chancellor announced there will be a £10.9 billion increase in housing investment to support the commitment to build at least 1 million new homes by the end of the Parliament, and an average of 300,000 homes a year by the mid-2020s.
SOME PREDICTIONS FROM THE INDUSTRY
Here are some of the ideas we have heard on where the government should focus:
- Re-start stalled projects;
- Kick start construction of essential facilities (mortuaries, R+D facilities etc.);
- Kick start shovel-ready projects – more money to councils to repair (roads, schools, hospitals etc.).
- Incentivise and accelerate affordable housing (and remove barriers to developments);
- Accelerate the fast broadband infrastructure programme;
- Accelerate(!) the Smart Motorways programme.
- Railway branch lines;
- Better roads;
If the predictions are right, or even close, there will be a significant increase in recruitment in the construction industry – both on and off site. With housing, healthcare and infrastructure sectors likely to benefit most, we anticipate much more activity with the following companies:
- Those already on government frameworks delivering public sector projects;
- Housing developers;
- Civil engineers.
If you are thinking about changing jobs, there will be increased security and career momentum with these companies.
For the BIM centric, there will be a real opportunity to accelerate digital adoption in civil engineering.
Our recommendation is to look out for the chance to join the best of these companies.