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Construction recession hits North-East economy hardest

The North-east has been hardest hit according to a report setting out the region-by-region impact of the construction downturn

The UK Contractors Group, which commissioned the report, is using its findings to call on the government to prioritise construction projects that would bring the maximum economic and social benefits to kick-start growth, reported sister title Construction News.

The study, by the Centre for Economics and Business Research and business intelligence unit Glenigan, found the economic benefit of spending on construction in the North-east fell by 23.4 per cent between 2007 and 2010 from £3 billion to £2.3 billion, reflecting the drop in construction output by 27 per cent between 2008 and 2010.

Other regions whose economies were hardest hit by the downturn include Wales, where the economic benefit brought by construction dropped by 18.2 per cent, and Northern Ireland, where it fell 19.6 per cent between 2007 and 2010.

The report, Making the economic case for construction, found London and Scotland emerged the least damaged. In both areas the economic benefit brought by construction spending fell by just 2.2 per cent.

UKCG chairman James Wates said: ‘The construction sector is uniquely placed to support economic growth and social change.

‘Capital spent through the sector brings direct and tangible multiple returns to the UK and our ability to employ and train a wide cross-section of the workforce is un-matched.

‘We understand how difficult a set of choices government faces at the moment, so we are not asking for help, we’re offering the support and can-do attitude of the sector to drive growth and employment.’

He added: ‘By using existing local arrangements, current projects in the pipeline can become shovel-ready very quickly. We applaud the Prime Minister’s action on such projects and we stand ready to support the government’s economic recovery plans. We also urge local decision makers to look at the potential of construction activity to kick start economic growth.’

The regional comparison found that construction investment in the South-west retains the greatest proportion of the economic gain.

It follows work by global strategy firm LEK Consulting for the UKCG that showed for every £1 of spent on construction the wider economic impact was £2.84 for the UK economy.

The South-west retains 94.8 per cent of the benefit, closely followed by the South-east at 94.6 per cent.

The UKCG is lobbying the government to use existing frameworks so that construction spending can have the most impact in the short to medium term.



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