The construction industry warns the government about the prolongation of the recession – Economy

The construction industry warns that the exceptionally bad economic cycle in construction is pulling down the entire economy more strongly than the government thinks.

Construction the economic picture is clearly worse than the view expressed by the government’s budget rush preparers before the rush, says the CEO of Construction Industry Aleksi Randell For Helsingin Sanomat.

Rakennusteollisuus (RT) is an interest protection organization of building material manufacturers, construction contractors and building industry companies.

“Construction can start properly in 2025 at the earliest. The biggest problem is that the situation will drag on.”

At the same time, the recession in the construction industry can deepen the recession in Finland as a whole.

“The construction cycle drags the entire economy down.”

Randell’s in my opinion, politicians have too positive a picture of the impact of problems in the construction industry on the economic situation. For example, the Minister of Finance Riikka Purran (ps) and the Minister of Environment and Climate Kai Mykkänen (kok) appointed official working group dealing with the state of housing construction starts from the fact that although construction difficulties slow down economic growth, a significant contraction of the economy as a whole is not expected.

In construction, unemployment is increasing, but overall the unemployment rate remains manageable, officials estimate.

Randell is not convinced by those views.

According to him, revitalizing measures should be taken immediately, because construction is a post-cyclical industry.

“We have received rather cold answers from the manufacturers, taking into account that the construction value chain employs one in five workers.”

Russian According to Randell, after the attack on Ukraine, the state-supported housing construction starts almost completely stopped due to the increase in costs.

That is why the government would be urgently needed for help.

“Even the government program says that ARA construction should be done counter-cyclically.”

“In this situation, we should also strive to ensure that institutions and investors are able to build enough rental apartments.”

“Furthermore, a clear signal and support for renovation construction is needed, and of course the initiation and schedule of infrastructure construction in accordance with the government program.”

Construction industry according to the current exceptional situation, construction costs and contract forms higher than the normal ARA limits should be allowed in housing construction supported by the state, for example, in order to get buildable plots under construction.

According to Randell, not enough projects are started under the current conditions of the so-called short interest subsidy model.

“And according to the information we have received, banks are very cautious about financing housing projects of even solvent investors.”

Randell reminds that the share of construction in gross domestic product is about seven percent and construction investments about 15 percent.

Now the value added in construction is 8–10 percent lower compared to last year, says Randell.

According to forecasts, the corresponding figure for the entire country’s economy is only mildly negative.

“The difference with the Finnish economy is exceptionally large.”

Repair construction as well the figures are below freezing, and the expected large-scale industrial construction projects in Finland will start in 2025 at the earliest, Randell adds.

“Municipalities have also started to reduce construction, because the increase in costs hinders the implementation of projects in decision-making.”

By Editor

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