George Osborne has warned that the health of the UK economy is at risk from shaky global conditions, saying 2016 has opened with a “dangerous cocktail of new threats”.

Speaking in Wales, the Chancellor cautioned that, far from being ‘mission accomplished,’ 2016 will be ‘mission critical’ for Britain.

The crux of George Osborne’s speech focussed on the turmoil in the financial markets last week that saw 5% wiped off the price of crude oil. 

Turmoil in commodity markets, as well as a slowdown in growth in the Chinese economy, recessions in Brazil and Russia and turbulence in the Middle East and North Korea could all present potential hazards to the UK.

The effect on contractors

If crises do emerge and the UK economy suffers then it is usually the flexible labour market that is hit first and for longest. Turbulence in the economy affects certain industries and sectors more than others.

Unfortunately, contractors in the construction industry are usually among the worst affected. In the aftermath of the 2008 recession more than 25 percent of salaried construction workers lost their jobs, and self-employed construction contractors were even less recession-proof.

However, the country’s insatiable demand for homes and infrastructure at present, as well as vocal support from the government could buoy the industry if disaster strikes.

Some positive news

We can gleam some positives from the Chancellor’s speech. The cost of Brent crude oil dropped by 5% during one day of trading last week to $34.60 per barrel – that is its lowest level in 11 years.

This is good news for contractors who drive long distances because it means the price for petrol is likely to fall again. Several supermarkets already dropped their forecourt prices for petrol to below £1 a litre in December and interest groups are confident that any further savings will be passed onto motorists.

Jon Biddle, Group Chief of Operations at Umbrella.co.uk said: “The dominant opinion among stock market traders is that the price for oil will remain low for some time because of growing tension between two of the world’s largest producers, Saudi Arabia and Iran.

“In the past these countries have been able to stabilise prices by altering demand but growing political hostilities between the two could make this difficult.

“The falling oil price will be beneficial for British consumers and most businesses, but for contractors involved in the production of North Sea oil it unfortunately looks like more tough times to come.”