by Simon Fitzsimmons | Dec 27, 2022 | News
Rampant inflation and “economic turmoil domestically and globally” is hindering construction projects reaching the build stage, with every region in England suffering declines in project-starts.
The latest Glenigan Index of construction, which details starts through to end of November 2022, reveals a steady decline in performance throughout the second half of 2022.
The report shows residential construction work starting on-site slipped back 1% on the preceding three-month period but remained unchanged on a year ago.
Private housing construction-starts improved slightly, increasing 1% against the preceding three months and 9% on the year before.
However, by contrast, social housing project-starts declined by a tenth against the preceding quarter and performed especially poorly (-29%) compared with 2021 levels.
Likewise, non-residential sectors also experienced a downward trend with hotel and leisure work starting on-site falling 30% to stand 40% down on 2021 levels. Health project-starts tumbled 37% against both the preceding three months and the previous year.
Civil engineering work starting on-site fell by a quarter to stand 12% down on a year ago, while education dropped 11% and industrial by 15% on the preceding quarter, (falling 15% and 10% respectively against the previous year).
Like private housing, office project-starts achieved growth compared to 2021 levels. Despite a 12% decline in the three months to November, a strong start to the year saw its value actually increase by 3% overall.
Summary of the index says the key takeaway from November’s Index is the continued, steady decline in performance throughout the second half of 2022, pointing to a particularly bleak winter sector-wide ahead.
With the UK in the grip of a cost of living crisis alongside external factors contributing to continued materials, energy, and fuel price inflation, Rhys Gadsby, senior economist at Glenigan, says the results reflect the multitude of current challenges:
“The poor performance in November tops a weak autumn for construction-starts in the UK. Given the economic turmoil domestically and globally, it was unsurprising that these latest figures should remain depressed.
“The cost of imported construction materials and supplies, skills shortages as well as a weakened pound and higher than expected interest rates continues to impact construction projects moving on-site.
“This tricky period will likely see us through to the end of the year, as the industry navigates these ongoing challenges. Going into 2023, we need to see more affirmative policy from the Government, particularly in critical areas such as housebuilding, to help stimulate the market.
“However, the industry can take hope from the promise of a strong development pipeline of contract awards and approvals built up over the last few months, which should help to stabilise project starts in the first few months of 2023.”
Summarising the data Glenigan says the “rapid succession of unusual, but highly disruptive external events over the past 12 months have taken their toll, and businesses across the sector are experiencing multiple waves of economic aftershocks.
“Unfortunately, with the Russia-Ukraine war and resulting materials, energy and fuel price inflation unlikely to abate any time soon, a return to pre-COVID activity levels looks set to be delayed for some time to come.”
It also adds the “fallout from September’s ‘mini-budget’ and consequent economic uncertainty is still affecting confidence across the board, stagnating projects moving to site.”
They do however point out that the market is showing small signs of stabilising, as evidenced by last month’s Glenigan Construction Review and an uptick in contract awards and planning approvals.
Regional analysis:
- Scotland was the only region to experience growth against both periods, with the value of project-starts rising 3% against the preceding three months and 4% compared with a year ago.
- Construction-starts in London advanced 3% against the preceding three-month period but remained 8% lower than a year ago.
- The West Midlands experienced 5% growth during the three months to November but remained 3% behind 2021 levels.
- London and the West Midlands were the only areas of the UK to experience growth against the preceding three months.
- Project-starts in Northern Ireland fell sharply (-39%) against the preceding three months, but stood 13% up on a year ago.
- The East Midlands performed particularly poorly, suffering a 23% drop against the preceding three months to stand 16% down on the same time last year.
by Simon Fitzsimmons | Oct 30, 2022 | News
The rising cost of living and uncertainty surrounding energy bills is already being felt by the charity sector with nearly five million people choosing not to make a one-off charity donation last month.
As household budgets feel the pinch, nearly one in ten (9%) people said they held back from donating, according to Charities Aid Foundation (CAF) UK Giving research.
Worryingly for many charities that rely on direct debits and standing orders, more than 3.2m people (6%) also said they had reduced or stopped a regular payment to charity because of increasing living costs.
The research also reveals nearly one in five individuals (19%) are considering cutting back on their donations, compared to 14% six months previously. In August, this number rose to 22% as household concerns around energy bills peaked.
CAF’s UK Giving tracks household donor behaviour every month. The tracker reveals how levels of donations continue to trend downwards. In September, only 26% of people said they had donated in the previous month. Prior to the pandemic, around 30% usually said they gave to charity during September.
The average monthly donation also declined in September, with a mean donation of £51, compared to £67 in August.
Summer has traditionally been a popular time for sponsored sporting events, and September saw the build-up to the London Marathon on 2nd October. However, only 8% of people sponsored someone for charity last month and 5% in August.
Neil Heslop OBE, chief executive of the Charities Aid Foundation, said: “Charities need donations now more than ever, as more families rely on the vital services they provide. Mass giving is crucial for many charities, so as people cut back, Government and private sector funding which supported charities through the pandemic is greatly needed to help them through this crisis.
“With more than £500m of Gift Aid unclaimed which should rightly be with charities delivering frontline services, the process needs to be simplified to deliver desperately needed funds. The Government also needs to address the current complexity of the VAT system since it’s estimated that the sector loses billions paying tax that they cannot recover later.
“Despite falling donations, charities are working hard to help the growing number of families at the sharp end of the cost-of-living squeeze. But ultimately, charities are having to do much more, with much less money.”
by Simon Fitzsimmons | Jun 29, 2022 | News
Only one in three (37%) hospitality businesses is currently profitable, new data reveals, with the sector struggling amid increasing prices.
For the 63% of hospitality venues struggling to turn a profit, the biggest factors are the rising costs of energy (74%), goods (55%) and labour (54%).
The survey was conducted by the British Beer and Pub Association, British Institute of Innkeeping and UKHospitality, and comes almost one year after the Government released its Hospitality Recovery Strategy, which looked to increase the resilience of the sector.
The picture for hospitality businesses however remains bleak, with 45% of businesses forced to reduce opening hours to avoid closing permanently, one in six reporting they have no cash reserves, and less than one-third (28%) considering investing in their businesses because of the challenging economic climate.
In a joint statement, the British Beer and Pub Association (BBPA), British Institute of Innkeeping (BII) and trade body UKHospitality said: “These figures are extremely worrying and demonstrate the critical situation hospitality businesses across the country are currently in.
“Given the chance, our industry has huge growth potential and the ability to play a critical role in the levelling up of communities in every single part of the UK, but instead we are still struggling to get back on our feet properly after a turbulent two years.
“In the past few weeks inflation has hit record levels and costs on key ingredients and utilities has rocketed, whilst consumer confidence has plummeted resulting in fewer customers in our venues. We are weathering a perfect storm, but we can’t hold on forever, we need relief as soon as possible before the cost of doing business forces venues to close for good.”
The group highlights three key priorities to get the sector back on track: tackling the current inflationary headwinds facing the sector; reforms that would unleash growth potential and a new tax and investment regime that facilitates a resilient and productive hospitality sector.
The BBPA represents companies in the UK which between them brew over 90% of the beer sold in the UK and own 20,000 pubs. The UK’s beer and pub industry supports close to 940,000 jobs and adds £26.2billion to the UK’s economy each year. The BII is the leading independent licensee support organisation for individuals working in hospitality.
