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UK construction gloom

 Oct 24,2011
The UK's worst decline in construction activity for 30 years is being predicted, along with a forecast that construction activity is unlikely to return to growth until 2014.

These predictions come from the latest Construction Industry Forecasts published by the UK's Construction Products Association.

It said that since the start of the economic downturn in 2007, more than £32 billion (€37 billion) of construction activity had been lost.

Michael Ankers, chief executive of the Construction Products Association, said, "Although government is committed to cut capital expenditure by 20% over the next four years, the hoped-for robust recovery from the private sector, to compensate for these cuts, is not materialising."

He said that with both the commercial and housing sectors still performing badly, the latest forecasts indicated that construction output would fall by more than 1% this year, a further 3.6% next year, and no growth in 2013.

"Recovery finally arrives in 2014, but by then we will have experienced the worst decline in construction activity for more than 30 years. It is essential that more is done by government to kick start the economic recovery."

Mr Ankers said that despite the government's desire to support housing recovery, housing starts in 2012 would be the second lowest year since 1945.

"Private sector housing is slowly recovering. Unfortunately public sector housing starts are forecast to fall by a third, leading to an overall reduction in the total number of housing starts in 2011 and 2012. By the end of the forecast period we will have a shortfall of more than 2 million homes in the UK.

"Equally worrying is the commercial sector - the largest construction sector and a bellwether for private sector activity. Although commercial construction in central London is buoyant, there is little activity in rest of the country. As a result this sector is expected to see a fall of 3% in 2011 and 4% in 2012, before a return to growth in 2013."

There was a more positive area that Mr Ankers spotted in the forecasts - infrastructure.

He said that infrastructure output was set to grow throughout the forecast period, driven by considerable increases in rail and energy-related work, even though road expenditure continued to decline. It was forecast that during this period, rail infrastructure would see growth by almost 80% and construction of energy-related projects by a massive 200%.

"Government recognises that construction is a key part of economic recovery," said Mr Ankers, "yet these forecasts herald a very difficult few years, not just for construction but for the wider economy."

He called upon the government to use its autumn statement - an update of the state of the UK economy which will be on 29 November - to stimulate recovery by rebalancing the economy between current and capital spending.

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