It has been a difficult year for the construction industry. Firstly, Carillion’s collapse left their suppliers out of pocket and desecrated the supply chain. Consequent issues, ranging from cold weather to Brexit uncertainty, have simply weakened the sector further. Unfortunately, lenders have noticed this building vulnerability and have become weary to inject cash into an industry which is bordering on another crisis. New reports have found loans within the sector contracted in the last six months, stemming from a general fear of investment as Brexit uncertainty continues.
According to new data from the Bank of England, loans to construction and civil engineering businesses contracted in each of the six months to August. This marks the longest run of declines since the first half of 2011. This highlights the caution that is being directed towards the construction sector, as well as a general slowdown in lending across multiple areas of the UK economy.
Brexit is undoubtedly reducing levels of investment and finance, with both business owners and their lenders hesitant to commit to an economy that is still so wrapped in uncertainty.
This concern was not exactly eased when Bank of England governor, Mark Carney, warned last month that a no-deal Brexit could cause “economic chaos”. He warned that a property crash could occur, driving house prices down 35 per cent and heightening the chance of a second financial crisis. This pessimistic sentiment is no doubt inspiring the low confidence of the construction sector as well as others across the UK business landscape.