The collapse of Carillion, the giant construction company, could have a chain effect on the private construction industry and on London’s domestic market making it harder for London-based companies to compete for small building projects.
When Carillion announced that the construction company is on its last leg, millions of qualified tradesmen knew that their future will become very uncertain. What was not known at the time is the scale of small building companies, contractors, and building suppliers connected at the time with Carillion, who are also about to be laid off.
If the existing building projects, commercial and private, undertaken by Carillion are to be canceled or put on ice for the time being until new management is put in place or a new construction company will replace Carillion, the workforce employed by them will have to look for new jobs and the most likely sector will be the domestic sector putting extra pressure on small construction firms competing for building projects worth less than £500.000.
Traditionally, London’s property market offers the best rates for professional tradesmen even associated with high-cost living, however, the low demand and a drop in domestic investment coupled with a low increase or even a drop in house prices could make 2018 a very challenging year for builders in London and small construction firms operating in London and in England.
The Mayor of London’s draft London Plan sets a target of building around 65.000 homes a year, a target that might prove to be over-optimistic.