Construction to fall back into recession

Published:  07 September, 2010

LONDON: The UK construction industry will return into recession despite strong growth in the first six months of this year according to the Construction Products Association.

Its latest forecast is for output to fall for the rest of 2010 and into 2011.

The CPA warns that the growth in the first six months this year was the result of the last government's fiscal stimulus combined with a tentative recovery in the housing market. This is not the basis for a long-term recovery, it said.

Michael Ankers, chief executive of the Construction Products Association, said: "Although 2010 as a whole is likely to be slightly better than 2009, it is very much a year of two halves with construction output slipping back in the second half of the year as a result of growing uncertainty in the housing market and cuts in public spending".

Mr Ankers said the industry needs to see strong private sector growth to offset the anticipated reduction in public investment that over the coming years.

However, the latest figures published on Friday for new construction work show recovery in orders for private sector work are below that needed to offset the anticipated 18% fall in public sector work over the next two years.

Mr Ankers said: "While we can see the prospects for a pick-up in output in 2012 and the following two years, this recovery is going be slow and hold back a more rapid growth in the wider economy. Even by 2014, output in the industry will not even have recovered to the levels it experienced in 2003."

He called on government to recognise that spending cuts and tax rises alone will not secure long-term economic growth and to invest in essential infrastructure.

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