Worse than the Great Financial Crash of 2008’ is how the head of one architectural practice described the state of the UK’s construction industry to me only a few weeks ago.
Demand for new projects had dried up, he warned, even for the smallest of home extensions.
Building suppliers were falling like kingpins, architectural practices were reporting losses and sacking staff while the rest of the construction supply chain was being shaken to the bone.
His medium-sized London practice was being inundated with cold calls on a daily basis from structural engineers and contractors – ones that would normally not get out of bed for a project less than a £1million – who were now prepared to consider smaller £100,000 jobs, and drop their fees.
Everyone is scratching for crumbs, with tradesmen from bricklayers to joiners trying to turn stone into life. Some builders are so desperate they are hanging pictures for clients rather than building.
The architect’s prognosis was on the money. The latest GDP numbers from the Office for National Statistics (ONS) show construction shrank by 1.3 per cent in November, and by 1.1 per cent in the three months to November.
Bankrupt: A worker carries a box of belongings out of Lehman Brothers offices in Canary Wharf, London on September 15, 2008 at the height of the financial crash
This is the biggest three-month fall in nearly three years. Both new work and repair and maintenance have been hit, falling by 1 per cent and 1.1 per cent respectively.
Private commercial new work was hurt the hardest, down by 4.5 per cent; private housing repair and maintenance was down by 3.7 per cent; public new housing dived 10.8 per cent.
Bang on cue, housebuilder Taylor Wimpey warned that profits will come under greater pressure this year.
So much for Labour’s promise of 1.5m new homes during this Parliament. It will be lucky to achieve half that: demand for concrete fell last year to its lowest level since 1963.
There was the tiniest hint of optimism in the ONS figures. Overall, GDP grew 0.1 per cent over three months, with a slightly firmer 0.3 per cent rise for November despite the uncertainty and chaos surrounding Rachel Reeves’s tax-hiking, destructive Budget.
Hardly something to shout about. Most of that growth came from Jaguar Land Rover resuming production as well as a bounce in services output, suggesting the uptick was more to do with reversing the declines of the previous months rather than the economy motoring again.
The evidence gets bluer. Data from lenders shows the biggest jump in credit card defaults in the last three months of 2025 for two years, while the Bank of England reports the sharpest fall in mortgages in two years.
A report from consultants Beauhurst says a record 768,000 firms closed last year, some 80,000 up on the year before.
The prime casualties? Those in e-commerce, property development and construction, along with restaurants and pubs.
And unless the Government goes ahead with another U-turn to reduce business rates for the High Street as well as pubs, there will be many more thousands of closures to come in the hospitality sector.
What of construction? Building homes, householders improving their properties, businesses investing in new buildings and infrastructure are the bedrock of any prosperous economy.
Life can indeed be breathed into stone but that requires bold action which is not forthcoming. Instead we have an economy flatlining and confidence at a standstill.
Sadly, the reason why the mood may be worse than 2008 is that, this time, the problems are self-inflicted and home-grown rather than global. Worse still, Labour reckons it’s doing a good job.
Booming tax
Those Regency-period parents knew a thing or two. They encouraged their offspring (in those days, boys only) to go into secure professions like the military, the church and law.
Today, they might want to swap the church for accountancy – but the military and law are going strong.
As GDP figures show, the 4.6 per cent growth in the services sector was due to demand for accounting and tax consultancy ahead of the Budget.
How embarrassing that one of our few booming industries is avoiding the incompetence of successive governments over tax.
More depressing still is that neither the Conservatives (other than promising to abolish stamp duty) nor Reform have addressed a serious overhaul of fiscal policy, one of the greatest constraints on growth.
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