Edward Winterton, UK CEO, reflects on the construction sector in this Investors Chronicle piece, characterising the present moment as a “perfect storm”. He comments:
“It’s estimated that the construction sector contributes around £115bn to the UK economy. While large housebuilders and prime contractors undoubtedly drive activity and stimulate supply chains, the contribution of the firms they subcontract is often overlooked. The knock-on multiplier effects of subcontractors coming under pressure are massive. Our own research shows that when these smaller businesses face challenges, they hold back from recruiting new workers, lay off staff and even take-on contracts they previously would have considered too risky. This impacts the wider industry both in terms of output, employment and increasing disputes which each sap productivity levels. There’s also the added risk of increasing insolvencies, so the impact these businesses have – collectively – on the sector is far reaching.
“We believe it’s a combination of factors, so a perfect storm so to speak. Brexit is clearly not helping the situation, but it’s not solely to blame. It’s estimated that up to 30,000 businesses were directly impacted by the collapse of Carillion, so the multiplier effect is vast. Add to this declining confidence and reduced investment such as that we have seen over the last four quarters, this is a heady mixture for the sector to overcome.”