Construction industry faces further uncertainty under hung Parliament

The construction industry faces a period of continued uncertainty, given that no political party managed to win an overall majority in last week’s general election.

That’s according to Glenigan, the construction industry market information provider.

Whilst a minority Conservative government appears the most likely outcome, the delivery of its policies will still be subject to negotiation through Parliament, with public sector capital expenditure programmes likely to be regarded as a relatively easy target.

Construction related areas, from the schools building programme to Crossrail, will be vulnerable to both explicit spending cuts and to cuts by stealth as protracted policy reviews push back planned spending.

The Conservative party has argued for effective action to cut public spending and tackle the budget deficit in order to reassure financial markets and nurture a private sector lead recovery.

A minority Government will have to demonstrate to financial markets that it is able to deliver the promised overall reduction in the budget deficit. Furthermore there is a risk that continued political uncertainty could undermine consumer and business confidence and hamper the pace of economic recovery. In particular there have already been tentative signs that the upturn in the housing market faltered ahead of the general election.

There is a risk that political indecision will be replicated in the housing market, dampening the anticipated recovery in new housing activity over the next twelve months.