Beginning of the beginning

Beginning of the beginning

BLOG · BY TTF CEO David Hopkins · 7 May 2020

The UK now has all eyes on Prime Minister Boris Johnson’s speech upcoming on Sunday, where he is due to announce the UK’s exit plans from quarantine.

In a sign of the times, the rhetoric from number 10 has begun to shift slightly over the past week. This builds up towards Sunday evening when Prime Minister Boris Johnson is expected to address the nation about restarting the economy.

Indications in the lead up to this announcement include Chancellor Rishi Sunak saying that the furlough scheme will begin to wind down from July. While no ‘cliff edge’ is expected, we will likely not see a formal proposal till mid-May.

The TTF will be advocating to extend the scheme with further flexibility to, for example, partially subsidise some workers wages. Our report last week indicated that most members do not expect to be back to normal activity till at least September 2020.

Meanwhile the release of the latest construction PMI revealed the sharpest decline since the survey began 23 years ago. We are set for a bumpy ride, looking at projections in our latest TTF statistics release.

It will be important Government takes decisive, intelligent action to support and stimulate businesses in the construction industry. One of the big questions currently is how the widespread use of social distancing will impact construction output.

The Economist recently wrote a piece on the impact of continuing quarantine measures will have in the US under the term the ‘90% economy’. That is to say in a suppressed economy, where much of the discretionary spending remains absent.

It seems from Government and industry announcements that construction will be one of the first to sectors to reopen. But if the rest of the economy operates at approximately 90% where will construction sit as an industry?

A  briefing circulated by Barbour ABI suggest that the number of workers on sites could be as low as 15% of normal figures in some cases, leading to increased costs and build times over the next year, as the industry looks to return to levels of normality post shutdown.

It will be important that any shifts in support from Government are gradual, and signaled well ahead of time so businesses can prepare. Meanwhile, we are looking to see the CLC’s ‘Roadmap to Recovery’ currently under development.

We will be keeping a close eye on Sunday’s announcements, and update members accordingly. In the meantime, we wish everyone the best for this long weekend.