The UK Construction Industry Is Overcoming The Recession

The term recession can be defined as a period of general decline in business activity. During a term of nationwide recession, a reduction in production, selling and purchasing will be observed, along with a boost in general unemployment. Sometimes a recession will have a direct effect on a particular industry or geographical area. Based on previous terms of recession, an economic downturn brings the end of extended periods of inflation and can mean a reduction in product prices. The people most affected by recession are the employees that lose their jobs when businesses need to cut their expenditure.

The United Kingdom’s national economy has been massively affected by the recent fiscal downturn, with the sector of construction being one of the most affected divisions. In December, 2008, the sub-sectors of commercial construction and civil engineering fell at record levels, though the sub-sector that was most affected was house construction. Although the British government had tried to counteract this decline, the Bank of England was forced to slash interest rates to a level not seen for 314 years.

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.

To conclude, the construction industry will always be vulnerable during a recession because of the nature of the market it is part of. This means that there will be no end to the recurring unemployment problems that are prevalent in this sector. Large businesses, however, do not undergo as much difficulty as smaller businesses because of the fact that larger organizations have the ability to spread economic risk due to having much more in terms of financial assets than smaller firms.

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About the author

Sherry Fields Sherry Fields has been working in real estate since 2002. Working with the development team for the Hilton Garden Inn gave her strategic information on the commercial real estate market in Missoula. Broadening her scope she moved into the residential market and earned the designation SFR in short sales and foreclosures. Currently affiliated with Prudential Montana Real Estate, she works with both buyers and sellers "building relationships so you can buy & sell with confidence". Sherry Fields has recently earned the CREN designation - Certified Real Estate Negotiator. While price is a large part of negotiation - it is also about timing everything from the closing date to inspections, appraisals, home insurance - and it is about negotiating items that can show up in home inspections to achieve a mutually acceptable outcome.

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