Construction sector heading for double-dip recession

7 09 2010

The UK construction industry is set to fall back into recession later this year according to a new forecast.

The latest Construction Products Association (CPA) industry forecast predicts that construction will be the first major industry sector to fall back into recession following a brief recovery in the first half of this year.

As The Construction Index reports, output will fall during the remainder of 2010, and the decline will continue into the first part of 2011.

According to the Index, the CPA forecast also predicts:

  • Construction output will only return to the 2007 pre-recession level in 2019;
  • Public sector including PFI output is expected to fall 26% over the next four years;
  • Private housing starts in 2014 will be 18% lower than in 2006;
  • Total housing starts will still be 41% lower than the figure required to meet anticipated annual population growth.

More positively, the CPA says that:

  • Infractructure output will grow by almost 50% between 2009 and 2014, driven by investment in rail infrastructure and energy provision;
  • Commercial output will rise for four years, between 2011 and 2014, yet it will remain 15% below levels seen in 2008.

The CPA represents Britain’s manufacturers and suppliers of construction products, components and fittings. Its chief executive Michael Ankers told the Index: “Whilst there was a bounce back in the first six months of this year, the figures are deceptive.

“The factors that drove this growth – the short term impact of the last government’s fiscal stimulus, a tentative recovery in the housing market, and the start of a number of major projects in the run up to the election – are not the basis for a long-term recovery.

“The industry needs to see strong private sector growth … but as the latest information on new orders for construction work published on Friday shows, recovery in orders for private sector work go nowhere near what is needed to offset the anticipated 18% fall in public sector construction work over the next two years.”

Many sectors of the economy are giving mixed signals at the moment, but the prospects for construction are decidedly gloomy. This latest forecast suggests that the magical private sector growth the government believes will compensate for the impact of public funding cuts simply is not happening.

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One response

21 11 2011
steve @ affordable homes

It’s a worrying time for anyone in the construction industry and without the proper investment, things are unlikely to improve. Whilst the recent reforms to planning were put in place to make developments more likely to go ahead, is it really going to drive more investment and development in the long run?

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