Executive Hire News › Archives › December 2009 › Forum : Ten turbulent years
Forum : Ten turbulent years
Ten years ago as we stood on the threshold of the Millennium, the fear uppermost in many minds was that computer systems across the world would all crash, bringing chaos to vital supplies and services. The mayhem never happened and everyone breathed a sigh of relief.
Unfortunately the smooth passage into the 21st century was not to last long. Over the past decade we have witnessed enormous shifts in the global economy and international politics, accompanied by the increasing effects of climate change. For many, the defining moment of the decade was in 2001 as we watched those planes crashing into the Twin Towers on 9/11; the United States, the world’s sole superpower at that time, was suddenly very vulnerable.
More recently we have felt all too sharply the vulnerability of western economies. In 2000 capitalism ruled supreme, with the emergence of Eastern Europe and, indeed Russia itself, from communism, together with China’s increasing embrace of the ‘Free Market’. Ten years later, we are faced with the consequences of a financial crash, which might have been avoided if some restraints on the ‘Free Market’ had been in place.
As we discussed in last month’s Forum, the Stock Market’s revival indicates that we are pulling out of recession, but the legacy of the recent crash is likely to be with UK construction for the whole of 2010, if not longer. This is an industry which usually accounts for about 8% of GDP. Its continuing depression clearly has implications for the whole economy. Construction should be a driver for economic recovery; investing in the infrastructure brings longer term benefits by, for example, improving the efficiency of transport systems. The UK Contractors Group, in partnership with the CBI, recently published ‘Construction in the UK Economy: The Benefits of Investment’. Among its findings are that construction is the best sector for stimulating employment. It also confirms the strong ‘multiplier effect’ of construction expenditure, estimating that every £1 spent on construction stimulated growth elsewhere in the economy of £1.84. The Report presents a very convincing case for investing in construction as a way of returning our economy to growth.
Many will see this approach as a return to Keynesian economics, which has been so derided by extreme ‘Free Marketeers’. However, this Report carries a powerful message that investing in construction will bring both short and long term benefits to the UK economy. Unfortunately, the country’s finances are in a parlous state, and we are only months away from a General Election. Whichever Party wins, it seems inevitable that their first Herculean task will be to get Government finances back to a more normal state. Cuts in expenditure will inevitably be savage and capital expenditure is always the first on the line because it is the easiest thing to cut. Let us hope that this Report will help the construction industry to lobby for at least a moderation in those cuts.
As we approach the beginning of the second decade of the 21st century, the world order and the global economy both look far more uncertain than ten years ago. These uncertainties are felt in our own relatively small sector of the UK economy. This Report carries the message of the importance of the overall construction industry. As a crucial service to that sector, our hire industry should take comfort and draw strength from that.
OVER AND OUT AFTER 130 YEARS
As we leave this first decade of the 21st century, the continued impact that this recession is wreaking on the construction industry is the desperate news that Contract Journal, founded in 1879 and one of the two principal weekly publications serving construction, closed at the end of November. Its management cited ‘the unprecedented market recession which has slashed advertising volumes by more than half.’
Contract Journal’s management is wrong to throw in the towel now. Over the last 18 months, our advertising revenue is down by this sort of percentage, but we will continue to publish EHN because we are passionate about our industry and committed to help shape its future. We are proud of our achievements throughout this decade and we look forward to working with you in the next.
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