Just over a decade ago, in an obscure corner of the economy, there was an early warning sign that Britain was about to fall into recession. Months before the downturn had been confirmed, the maker of Dulux paints reported that sales of its decorative range were down. Faced with global economic uncertainty and a weakening labour market, Britons were cutting back on refurbishment. At the same time, lower demand for new houses meant that builders needed fewer materials.
What was first seen in the market for paints eventually spread to other parts of the property sector—and from there to the rest of the economy. Over a fifth of Britain’s building firms ultimately went under. Surveyors, estate agents and solicitors suffered. In all, falling housing investment accounted for a quarter of the drop in gdp in 2008-09. It played an even bigger role in the recessions of 1975, 1980-81 and 1990-91.