A recession is where there is temporary economic deterioration which lasts longer than a few months, sometimes years. This can be seen by the employment rate decreasing and the reduction of trade and industry work. This is determined by the Gross Domestic Product (GPD) which is a government statistic which shows the total country’s economy movement. This is measured every 3 months (quarterly) and it is said that if after two consecutive quarters the GPD is down then the country is seen to be in recession. (Kollewe, 2009). The most recent recession in the UK kick-started in 2008, which was seen to be one of the worst recessions the UK has seen since the Great Depression. In July 2008 was when it became increasingly obvious that we was about to enter a recession; the unemployment rate kept rising, the housing industry started to cut thousands of jobs and the whole-sale industry was declining in production. (Allen, 2010)
When we see an economic downturn many of the different industries are affected in different ways depending upon their demand. The industry which always seems to be affected first and the last to recover is the construction industry. The construction industry is one of the largest sectors of the UK’s economy. It contributes around £90billion which is 6.7% of the total and 2.9 million people are employed within the construction sector. (HM Government, 2013) (Barawas and Fleetwood et al., 2013) This contribution is measured by the Gross Value Added (GVA), here below is a table to represent the contribution the construction industries GVA (for 2012 prices) and its % of economy.
(Rhodes, 2013, pp. 3)
From the table above you can see that it was in 2007 which was highest peak the construction industry in the last 10years, contributing £102.5 billion (7.1% of the economy) however in 2012 the contribution was £19.5 billion less than at this peak. In this next graph you can see the how the construction industry fell deeper into the recession than the whole economy and how there was a rise in 2009 however how the construction industry is still struggling to get out of the recession with a further dip in 2013.
(Rhodes, 2013, pp. 5)
Demand plays a huge part on the construction industry before and whilst recovering from the recession. Demand is the willingness and ability of buyers to purchase different quantities of a good at different prices during a specific period of time. (Arab, Z. 2013)
All countries undergo ups and downs in their economies, in means of employment, income spending and growth. The level of activity in the economy fluctuates over time. When there has been a constant growth, you can always expect a slowdown. These rises and falls are what is meant to be called and form “economic cycles.” Some economists agree that there are, economic cycles. The cycle can be determined by four stages, (Riley, 2012) these stages are known as;
This occurs when the economy is growing quickly for a period of time. This...