The Effect Of The Recession On The Construction Industry

February 6th, 2021 by dayat Leave a reply »

A recession is a decline in general business activity. For the duration of a nationwide recession, a country experiences a slump in buying, selling, and production, and an increase in unemployment. A recession may also affect a particular industry or region. Traditionally, national recessions have also meant the end of relentless inflation or possibly even a fall in prices. An economic depression hurts an innumerable amount of people, particularly the employees who lose their jobs.

The recent recession has affected all areas of the UK’s national economy. In December 2008, the construction sector diminished at its highest rate since records began. The biggest decline was recorded in house building, with the civil engineering and commercial sub-sectors also falling at record levels during that particular month. This meant that the Bank of England had to cut interest rates to reduce borrowing costs to the lowest level in its 314-year history.

Along with the decline in housing construction, the housing market has also experienced a slump. According to the Halifax bank, house prices fell by 16.2% in 2008, the biggest yearly decline since it first started keeping records in 1983. The benefit of this has meant that buying a home has become more affordable. However, obtaining a mortgage has become more difficult for a lot of people. The Bank of England confirmed that the number of approved mortgages fell to a nine-year low of 27,000 in November 2008.

Simply put, the last few years of economic recession has had a huge affect on the construction industry, more than many other industries. To simplify the business jargon, the construction industry has seen a reduction in the demand for new constructions. House prices have fallen because of the same reason; that being diminished demand, leading to property owners having to cut their asking prices to entice buyers.

For the reasons stated above, it is imperative that in the current financial environment, businesses in every industry continue to be competitive; though it is also important for businesses to be prepared, in every sense, for the forthcoming upturn that is inevitable in order to take full advantage of the situation.

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