Detailed Report on the Economics of the UK Construction Industry

This report provides a detailed economic analysis of the UK construction industry, highlighting its performance, challenges, and key trends. Part A examines the role of lone workers, the impact of economic events like Brexit, and the industry's contribution to the UK's GDP. It also compares the UK's construction engineering with that of other global leaders, noting areas for improvement. Tables and data are presented to illustrate the value of construction output, new orders, and the number of businesses classified under construction. Part B focuses on the trade deficit in construction materials and equipment, emphasizing its negative impact on the UK economy. The report uses statistical data to support its findings, offering a comprehensive overview of the economic dynamics within the UK construction sector. This assignment is available on Desklib, a platform providing valuable study resources for students.

Economics of the construction industry
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Table of Contents
Introduction....................................................................................................................................3
Part A..............................................................................................................................................4
Part B............................................................................................................................................11
Conclusion....................................................................................................................................14
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Introduction
The given report covers a detailed analysis of facts relating to construction sector of UK region.
This will help to gain an in-depth understanding of the shortcomings and achievements of this
particular region. The construction industry or sector of UK regions has seen may ups and down
during the last decade. As such, many changes have been introduced so as to develop and
promote and develop the construction industry. Such promotion and development will help to
promote the economy in a better economy. One of the important feature is that construction
sector is highly associated with real estate sector. Also, this sector requires higher investment.
3

Part A
The largest amount of lone workers in the UK construction industry is like self-employed
builders, carpenters, roofers, electricians, plumbers. Most of these will be sole or partnership
traders. These people are generally well experienced and qualified and manage their own
businesses. All should be complying to regulation standards set out by the various trade
regulators. Their own health and safety is their concern providing they do not employ anyone
and are the sole contractors but have to ensure the safety of their clients and the public at all
times under health and safety rules. This includes other trades brought in to do work. Ensuring
they wear hi-vis clothing, safety footwear and hard hats in appropriate areas and appropriate
circumstances.
The UK construction industry took a bit of a decline like a lot of things in the times of the credit
crunch in the UK. However, just recently there has been more positive news floating around
the construction industry. According to various theorists, the construction sector is growing at its
fastest pace in seven months. So it looks as though construction is on its way back up.
Value of construction output by type of work
New Work for Public Sector, Great Britain, Current Prices
(£
Million)
Current
prices (£
million)
Period
Other new work excluding infrastructure
Factories
Oil,
steel
&
coal
Schools
&
colleges
Healt
h Offices Garages Shops
Agricultur
e
Other new
work
1997 60 5 686 688 382 38 14 17 3,032 7,100
1998 76 4 793 630 450 34 19 21 3,311 6,773
1999 96 5 974 705 513 35 20 22 3,868 7,295
2000 89 4 1,004 746 396 50 40 13 3,826 7,343
2001 49 4 1,344 876 376 41 41 36 4,210 8,194
2002 53 3 1,791 1,077 680 48 55 37 5,463 10,583
2003 128 3 2,161 1,388 909 59 66 22 7,208 12,561
2004 117 4 2,999 1,705 904 68 60 10 8,553 13,658
4

2005 76 2 3,246 1,501 863 65 63 5 8,279 13,364
2006 67 2 3,390 1,214 812 64 55 9 7,968 13,450
2007 76 1 3,289 1,247 854 66 43 9 8,265 14,536
2008 55 11 4,067 1,648 871 70 43 9 9,889 16,294
2009 48 14 5,161 1,984 901 83 94 18 11,739 19,010
2010 72 12 6,421 2,423 991 136 201 21 14,203 23,839
2011 104 7 6,409 2,023 874 47 117 39 13,418 23,699
2012 111 60 4,961 1,669 777 38 38 79 10,777 19,282
2013 56 38 4,255 1,995 796 63 64 60 10,262 20,167
2014 84 8 3,910 1,714 478 90 90 26 10,363 21,895
2015 67 6 4,327 1,783 532 143 71 9 10,530 22,714
2016 110 1 4,697 2,024 728 335 102 5 11,203 22,255
So far, the £ has slumped and continues to steadily fall against the $ (lowest since 1985), banks
and house builders had billions wiped off of their market capitalisation on the stock market (and
continue a steady decline), five property investment funds have suspended their investors from
redeeming their investments, the British Chamber of Commerce in Germany has
warned UK companies to prepare for the worst when Brexit actually happens (pointing out how
long it took to establish an FTA with Canada), the Governor of the Bank of England and current
Chancellor have had to introduce measures to keep the economy afloat (scrapping budget surplus
target, relaxing capital controls for banks, probably lowering interest rates from the current
0.5%), the construction sector has started to contract, and the services sector shows signs of
slowing down. By now, residents of UK are almost used to it. Each day brings a new “oh shit”
economic story. Everyone is just waiting for the “Lehman Moment”.
The UK has thriving agricultural and fishery industries but is nowhere near self-sufficient in food
production. As the 5th largest economy in the world, the UK has to be a major exporter to
maintain this position. The main economic sectors are the service sector (tourism, hotels,
restaurants etc), road rail and air transport, pharmaceuticals, chemicals, construction, energy,
financial, healthcare, information technology and education.
The UK needs skills that support all these sectors and to be at the leading edge of relevant
technologies to maintain this position. The UK, which is famous for London, has a financial
backbone as it is considered to be the global financial hub since early centuries.
5

The services sector, mainly the financial services, is the main pillar of the UK economy which
contributes nearly 75% of the GDP. The Production contributes 14.6% in GDP
while Construction and Agriculture are the least contributing sectors of the economy with 6.4%
and 0.6% share respectively.
Especially in comparison to the engineering seen in Hong Kong, Singapore, Japan, Korea, and
now quite a number of regions in China. It just defies belief that the UK could be so primitive
and lack in the basic common sense in constructing residential high rises. If any UK company
intends to build something more than six stories high there, please hire at least one Hong Kong
architect or engineer to cross-check blueprints, for Pete's sakes.
6

New Orders for Construction: Value Non-Seasonally Adjusted By Main Contractors, by Type of Work
£ Million 2007 2008 2009 2010 2011 2012 20
PUBLIC HOUSING 3,733 3,081 3,107 3,482 2,691 2,450 3,
PRIVATE
HOUSING
16,037 9,200 6,393 9,953 10,506 10,805 14
INFRASTRUCTURE
Water 1,205 696 2,075 1,357 890 1,496 51
Sewerage 743 583 1,505 404 373 321 25
Electricity 992 751 660 1,937 1,842 2,471 3,
Roads 2,019 2,156 3,401 1,815 967 1,992 2,
Railways 1,016 1,877 1,975 2,142 3,288 3,395 2,
Harbours 549 862 471 281 211 355 67
Other 441 975 943 1,838 928 2,481 87
*TOTAL 6,965 7,897 11,032 9,774 8,499 12,510 10
of which – public 2,565 2,851 4,690 2,454 2,639 5,515 4,
-private 4,401 5,046 6,342 7,321 5,859 6,994 6,
OTHER PUBLIC
NON-HOUSING
Other Public Industrial 123 102 129 65 170 210 14
Schools & Colleges 4,577 5,858 6,695 6,126 4,278 3,479 3,
Universities 1,480 1,623 1,104 1,421 718 756 1,
Health 1,538 2,257 2,359 2,443 1,331 1,296 1,
Offices 1,071 1,114 1,013 847 554 804 28
Entertainment 1,291 2,349 1,116 1,085 685 585 63
Garages, Shops 113 170 460 103 55 92 13
7

Agriculture,
Miscellaneous
1,200 1,198 1,831 1,340 1,274 806 1,
TOTAL 11,393 14,672 14,709 13,430 9,065 8,028 9,
PRIVATE
INDUSTRIAL
Factories 2,945 2,409 1,560 1,031 1,118 1,568 1,752 2,365 2,766 2,602
Warehouses 2,713 1,707 989 887 802 841 1,570 1,567 2,208 1,968
Oil, Steel, Coal 176 231 104 214 225 250 281 2 20 50
TOTAL 5,836 4,346 2,654 2,131 2,145 2,659 3,605 3,934 4,993 4,620
PRIVATE
COMMERCIAL
Schools, Universities 3,218 2,015 1,411 1,175 1,412 1,298 2,316 2,599 2,846 2,948
Health 3,535 2,817 1,376 869 797 793 472 663 611 622
Offices
12,70
5
7,702 3,315 3,628 3,394 3,203 4,232 5,877 6,255 6,458
Entertainment 4,365 3,628 2,658 2,624 2,419 2,197 2,903 3,489 3,541 3,953
Garages 476 662 337 187 245 204 169 129 214 310
Shops 6,586 4,708 2,967 2,872 2,651 2,499 2,786 3,506 2,660 2,782
Agriculture,
Miscellaneous
1,230 1,820 822 2,225 2,087 1,781 684 653 561 664
TOTAL
32,11
5
23,353 12,886 13,58
1
13,005 11,97
3
13,563 16,91
6
16,690 17,73
7
TOTAL NEW
WORK
76,07
8
62,550 50,780 52,34
9
45,911 48,42
3
55,611 59,01
9
62,650 66,12
6
Number of Business' classified to Construction - 3rd quarter each year
Type of Trade 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Property
developers5
.. .. .. 33,031 30,486 27,811 28,281 28,371 3
1,346 33,68
4
12,942 11,850 10,629 14,615 14,349 11,072 10,528 10,528 11,64
0 12,78
7
8

Non-residential
building
26,502 29,050 27,791 26,126 25,135 25,946 26,983 27,088 32,54
6
36,92
0
House building 6,963 6,861 6,415 21,066 19,622 18,999 19,398 19,436 21,25
7
23,02
9
Civil
engineering
46,407 47,761 44,835 61,807 59,106 56,017 56,909 57,052 65,44
3
72,73
6
Total main
trades
.. .. .. .. .. .. .. .. .. ..
Constructional
engineers
1,164 1,430 1,406 422 463 500 564 571 691
711
Demolition 1,671 1,895 2,006 2,369 2,366 3159
3,305
Site preparation .. .. .. .. .. .. .. .. .. ..
Reinforced
concrete
specialists
236 247 244 253 267 268 257 257 249
252
Test drilling and
boring
7,406 7,884 7,584 6,745 6,584 6,525 6,800 6,825 7,684
8,351
Roofing .. .. .. .. .. .. .. .. .. ..
Asphalt and tar
sprayers
2,650 2,639 2,465 2,299 2,202 2,184 2,275 2,286 2,929
3,374
Construction of
highways
263 290 272 273 281 288 294 293 281
289
Construction of
water projects
.. .. .. 239 254 335 673 691 1,263
2,207
Construction of
railways and
underground
railways
.. .. .. 28 40 49 73 75 94
92
Construction of
bridges and
tunnels
.. .. .. 123 145 171 263 267 430
486
Construction of
utility projects
for fluids
.. .. .. 115 151 199 340 350 575
687
Construction of
utility projects
for electricity
and
telecommunicati
.. .. .. 17,989 16,549 15,773 15,480 15,474 15,68
5 15,89
4
9

ons
Construction of
other civil
engineering
projects not
elsewhere
classified
1,928 2,161 2,163 6,266 6,115 5,631 5,386 5,400 5,480
5,713
Scaffolding 27,091 29,128 28,155 36,932 36,958 36,503 36,638 36,687 38,81
2 41,28
3
Installation of
electrical wiring
and fitting
982 1,768 2,074 .. .. .. .. .. .. ..
Insulating
activities
25,603 27,368 26,454 28,870 29,151 28,993 29,709 29,846 31,59
4 33,75
6
Plumbing, and
heat and air
conditioning
installation
.. .. .. .. .. .. .. .. .. ..
Heating and
ventilating
engineers
3,554 3,741 3,492 3,952 3,876 3,784 3,953 3,959 4,307
4,976
Plastering 18,80
5
19,07
6
17,84
6
21,41
2
20,91
8
20,07
9
20,22
5
20,28
1
22,52
3
2
4,605
Joinery
installation
.. .. .. .. .. .. .. .. .. ..
Flooring
contractors
.. .. .. .. .. .. .. .. .. ..
Floor and wall
tiling specialists
5,764 6,138 5,852 6,372 6,282 6,110 6,292 6,320 6,798
7,487
Floor and wall
covering
.. .. .. .. .. .. .. .. .. ..
Suspended
ceiling
specialists
7,339 7,843 7,395 11,35
2
10,96
7
10,54
5
10,34
0
10,36
7
10,52
2
1
1,361
Painting 4,324 4,653 4,623 1,883 2,090 2,243 2,342 2,345 2,370
2,461
Glazing 2,735 3,229 3,122 .. .. .. .. .. .. ..
Plant hire (with
operators)
35,94
9
37,05
0
36,04
3
22,09
9
25,06
2
26,91
9
27,00
3
27,06
4
27,59
3
2
8,924
Other
construction
work and
building
.. .. .. 13,37
4
12,90
1
13,17
1
13,89
6
13,93
6
15,20
4
1
6,488
10

installation and
completion
Other
specialised
construction
activities not
elsewhere
specified
192,1
99
202,4
07
194,0
25
256,4
41
253,1
21
247,1
05
250,9
64
251,6
47
273,7
75
296
,093
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Part B
One of the major observations that can be observed is that the materials and equipment involved
in the construction sector have seen trade deficit since the inception. This gap has increased in
the year 2016 due to which the trade and volume of imports exceeds than the value of imports.
This indirectly negatively affects the economy of the concerned economy. Facts suggest that
such trade deficit have resulted in the amount of £9,090 million. Thus, such huge amount of
trade deficit has influenced the overall economy affecting the volume of trade negatively.
Also, the prices of materials used in construction industry have seen inflation during the year
2016. Especially in the last month of 2016, the inflation prices have reached 2.2% which is
comparatively higher in relation to other sectors.
Besides, due to increase in other incidental or ancillary sectors, the number of construction
orders has increased. Thus, it helps to provide numerous opportunities to different types of
personnel involved in or associated with the construction sector.
There aren't more women in this construction sector comparatively with other sectors. However,
the ratio is increasing gradually.
Women may not be available at site but most of the office duties like Quantity Surveying, pre
tendering, documentations, design coordination and many other things at the office level are
carried out by women only. We can't say no women in this sector but comparatively less.
Promotion of construction sector indirectly leads to the development of ancillary or
incidental sector. As such, it contributes to the better growth of the economy as a whole.
For the ease of understanding of the changes taking place in the construction sector and the
achievements of construction sector of UK, data has been taken past around 30 years
considering various factors. Such data has been shown in the excel sheet enclosed herewith.
However, for the purpose of analysis and interpretation, data has been taken starting from
2004. This will give a clear picture of the achievements of past 15 years and will help to
identify the factors responsible for such changes and achievements.
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