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CPA: Construction recession worst for 30 years

The construction industry is experiencing its worst decline for 30 years, losing £32 billion since 2007, according to the latest forecasts from the Construction Products Association

The CPA’s Construction Industry Forecasts revise output down to an estimated contraction of 1.1 per cent in 2011 and forecast a 3.6 per cent fall next year. Output is not due to return to 2007 levels until after 2015, reported sister title Construction News.

The research says that public sector construction, including the public finance initiative, is set to fall 24 per cent by 2014, including falls of 41 per cent in education and 45 per cent in health over the same period.

Private sector construction output is expected to rise 18 per cent by 2015, but it will only grow by 2.2 per cent this year and 0.7 per cent next year, the CPA found.

CPA chief executive Michael Ankers said: ‘Although government is committed to cut capital expenditure by 20 per cent over the next four years, the hoped-for robust recovery from the private sector, to compensate for these cuts, is not materialising.

‘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. 

‘Despite the government’s desire to support housing recovery, housing starts in 2012 will 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 two million homes in the UK,’ Ankers said.

The CPA forecast says that the largest construction sector, commercial, is still buoyant in central London, but there is little activity in the rest of the country. As a result this sector is expected to see a fall of 3 per cent in 2011 and 4 per cent in 2012 before a return to growth in 2013, the CPA found.

The infrastructure forecast is more optimistic. Rail will see growth by almost 80 per cent and construction of energy related projects are set to increase 200 per cent.

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

‘It is therefore essential that the government uses the Autumn Statement to stimulate recovery by rebalancing the economy between current and capital spending.

‘Government’s own figures show current expenditure rising from £632 billion this year to £694 billion in 2014/15, whilst capital expenditure is cut from £61 billion to £42 billion over the same period. Rebalancing this could make way for the £5 billion package of essential infrastructure investment that many commentators have called for.’

 

 

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