Hung parliament sparks fears of uncertainty

7 May 2010

City analysts have warned that the uncertainty of a hung Parliament will delay recovery in the construction industry, Building reported.

Howard Seymour, a construction analyst at Numis Securities, said the outcome was not good news. “It will be a longer time for things to pan out and get any visibility on the cuts that are to come.”

Francesca Raleigh, a support services analyst at Numis Securities, added: “A hung Parliament was always the greatest fear for the sector. While there are more positive longer-term trends towards outsourcing and the need for greater cost efficiency, this election outcome is likely to create delays to this process and provide greater hiatus for the sector.”

Civils contractors called for a swift resolution to the political uncertainty, Construction News reported. Civils Engineering Contractors Association national director Rosemary Beales said that  decisive action was needed to minimise uncertainty and provide clear economic direction.

Beales said: “With no clear outcome from the general election there is a need to avoid a prolonged period of drift. “Contractors want to see whichever leader becomes Prime Minister make an early commitment to a streamlined planning process for major projects and to delivering Infrastructure UK’s 'Strategy for National Infrastructure'.

“We also want to see early progress toward the establishment of the Green Investment Bank and a commitment to work with industry and other stakeholders to identify innovative means of financing much-needed major projects.”

There were also concerns about uncertainty in the housing sector with Jones Lang LaSalle warning that lack of clarity on Home Information Packs, public sector spending cuts and reforms to the planning system will put brake on housing market recovery.

In its opinion, house prices would remain static or decline in the short term, and transaction levels would decline.

But construction stocks reacted with indifference to the prospect of a hung Parliament. The news was greeted with falls in the share prices of major construction group, but this was largely due to the fact Wall Street dropped over 3% amid concerns over the high level of debt in the Eurozone countries including Greece. 

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