UK recession – outlook for the construction industry

Man holding blue helmet close up. Construction man worker with office and people in background. Close up of a construction worker's hand holding working helmet.

Marco Verdonkschot, Managing Director at IronmongeryDirect & ElectricalDirect, has commented on the latest furlough figures for the construction industry:  

“This morning, the Office for National Statistics released the latest figures for the government’s job retention scheme and it’s natural for them to be a bit concerning.

“The number of construction workers that have been furloughed has risen to 769,300, up by 17,300 from July. Three in five (60%) employees in the industry are now being paid by the scheme.

“The number of employers having to sign up also rose, with 174,000 now enrolled (up from 171,400). This means that over three-quarters (76%) of construction companies are now furloughing at least some of their workforce.

“As a result, the value of claims for furlough payments increased too. In August, construction employers claimed £2,931m to help pay their staff, up £324m from the previous month.

“Some areas of the country are having to rely on the scheme more than others. The South West of England has furloughed the highest percentage of its construction workers (63%). The least affected is the South East of England (55%), although it experienced the UK’s equal highest rise between July and August (2%), with 2,500 more employees furloughed. 

“However, Scotland remains the worst hit, with a staggering 73% of its construction workforce (89,200 out of 121,500) being paid by the government. Northern Ireland is a close second, with 71% currently furloughed, with Wales and England a little behind (62% and 58% respectively).

“It is positive that so many construction workers are receiving income during these difficult times, rather than companies simply making them redundant. However, when the furlough scheme ends at the end of October, we need to hope that the demand for work is great enough that employers don’t need to let staff go.

“Thankfully, there are some positive signs that this might be the case, as while construction output remains around a quarter (24.8%) lower than it was pre-lockdown, it increased by 23.5% between May and June – the greatest rise since records began.”

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