September 2022 update: Is a recession coming?

Earlier this year, we discussed whether the analysis report from Barbour ABI - showing a downturn in multiple aspects of the construction industry - was the first sign of an oncoming recession.

Following this, and more recently, we’ve talked of the mitigation of rising construction costs and a possible solution to this problem.?

But what, 9 months into a particularly turbulent, and certainly challenging year, does the industry look like and are intensifying recession fears simply speculation or certainty??

Indicative construction industry statistics

The struggles experienced by construction companies and the construction industry in general during the first 6 - 7 months of 2022 have been well documented and widely discussed within trade media; Construction Enquirer, for example, releasing several articles in June relating to significant downturns, particularly during the second quarter, in the commissioning and securing of new construction contracts - monthly construction output having dropped in June by 1.4%, new private housing falling by 6.1% and private commercial work falling by 4.5%. This, of course, compounded by soaring construction material costs.?

In fact, a bleak picture has been painted of the construction industry for the vast majority of the year; forecasting the difficulties ahead as the sector - like so many others - recovers from the aftermath of the pandemic, the end of the furlough scheme, inflation and those troublesome aforementioned rising construction costs.?

But is it really all ‘doom & gloom’ for this integral and, quite honestly, indispensable industry??

Could further investment in renewable energy alleviate these issues?

It’s a fair assumption that almost all industries have suffered in some way this year - thanks to the seemingly long-lasting effects of the pandemic, and everything that came with it, as well as extortionate fuel costs which have impacted all areas of everyday life.?

And this is where the crux of the issue lies - the cost of fuel, AKA fossil fuel.?

Fuel and energy prices will continue to rise as long as we rely heavily on fossil fuels to heat our homes & offices, and fill our vehicles.?

This serves to highlight the increasing importance and urgency of renewable [alternative] energy and its place in the energy sector.?

This is reinforced by the UK Government’s latest report on Energy Trends, published on 30th June, which states that renewable capacity grew by 3.1 GW since last year which is the largest new capacity added for four years. Within this, renewables’ share of electricity generation was over 45%.?

So, is recession coming? We’d predict yes, a recession is coming and has been for quite some time; the downturn experienced within the construction industry is not isolated, inflation is complicating an already fragile economy, and businesses are still recovering from an extended period of inactivity and/or severely limited activity across 2020 - 2022.?

And, although investing in renewable energy may not be the answer to solving all of these problems and dragging the country out of recession, it certainly is a significant step in the right direction.