Overview
The construction industry is one of the most important indicators of economic growth in the UK and around the world. Since the economy has been recovering from the recession several years ago, one of the biggest areas that economists tend to watch is the construction industry. Construction is generally a forward indicator of future economic growth, which means that when construction numbers are good, economists would project future economic growth will follow. In the UK, recent election results mean that the Conservatives have a large portion of control in the future decision making of the UK and many people are wondering how the construction sector of the economy is going to fare.
UK Economy
Many people wonder why construction is such an important sector of the economy. However, if they were to look at the numbers it would be easy to understand why. As a percentage of household net worth, homes are a huge make up of that number. For many people in the middle class, a large percentage of their net worth is tied up in their primary residence. This means that when construction is strong due to high demand, prices are rising and people see their wealth increase. However, when the opposite is true, people lose a large amount of their net worth through decreased prices on homes. There are many different policies that the government can put in to place in order to stimulate different industries on the economy
Economic Policy
There are many construction companies that are worried about what the new leadership changes are going to mean for the construction industry. With the recent changes at the top of the UK government, companies like Lagan Construction are wondering what these changes may mean for the construction industry. If the Conservatives that were recently elected decide to take a hands off approach to the economy, there could be some unintended consequences. One example of this is the reduction in home buyer programs.
There are many government programs for people that are buying a home for the first time. Many times, at this stage of life young people cannot afford to save up a down payment on a home so the government will help them out by supply loans that do not require a huge down payment. However, if these types of programs are reduced or eliminated this will hurt demand for new construction housing and will negatively impact the bottom line of the construction industry in the short term.