With UK and Ireland construction firms announcing site closures, project delays and profit warnings amid the coronavirus (Covid-19) outbreak. Moustafa Ali, Economist at GlobalData, a leading data and analytics company, offers his view on the challenges facing the industry:
“As the virus outbreak worsens in the UK and Ireland, several contractors have announced site closures and project delays to fulfil the governments’ social distancing requirements. The decisions taken by the firms have come with a severe economic and financial cost, with construction output expected to plummet in both countries in the coming months.
Given the project delays and more set to be announced in the coming weeks, GlobalData expects the construction industries in the UK and Ireland to be both severely disrupted by the ongoing lockdown measures. The UK’s construction industry is set to contract by -2.5% in 2020, while in Ireland the industry is expected to expand by only 1% this year following a solid year in 2019 when output expanded by 5.8%.
There is scope for further downward revision of the forecast for both countries if the health situation deteriorates and lockdown measures are intensified or prolonged. Several project delays and site closures have been announced, including key flagship government infrastructure projects that had been expected to support growth in construction in both countries. The project delays are a significant blow to contractors with several, including Taylor Wimpey and Balfour Beatty announcing that they will suspend dividend payments to shareholders.”