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Triple-dip recession fears grow but construction output rises

The construction sector saw a slight improvement in output but fears for a triple-dip recession are growing

Gross Domestic Product (GDP) was estimated to have decreased by 0.3 per cent in Q4 2012 compared with Q3 2012, the Office for National Statistics said today (25 January).

According to the AJ’s sister publication Construction News, the disappointing figure is subject to at least two further revisions as further data is collected.

The decrease comes as deputy prime minister Nick Clegg said the government made a mistake by pulling back on capital spending and not investing in infrastructure.

However despite the drop in overall GDP, construction sector output was estimated to have increased by 0.3 per cent in Q4 2012 compared with Q3 2012, following a decrease of 2.5 per cent between Q2 2012 and Q3 2012.

The previous three quarters had all seen construction contract.

But construction was still 11 per cent down between 2011Q4 and 2012 Q4.

Output of the production industries was estimated to have decreased by 1.8 per cent in Q4 2012 compared with Q3 2012, following an increase of 0.7 per cent between Q2 2012 and Q3 2012.

GDP was estimated to have been flat in Q4 2012, when compared with Q4 2011.

The figures mean the UK saw no growth throughout the whole of 2012.

Brian Berry, chief executive of the Federation of Master Builders, said: ‘It is clear from the deputy prime minister’s recent comments that government now realisesthe wider economic benefits that capital investment via construction can bring, however it must do more to unleash the potential in our industry by pulling the right levers.”

‘Our members are ready to help Britain build its way back to growth, in the process helping meet the spiraling housing crisis and improving energy efficiency in homes and businesses.

‘But we can’t do this alone. Government must meet construction firms halfway, and find imaginative new ways of increasing activity in the sector, particularly for small, local builders who may not immediately benefit from major infrastructure investment.”

UKCG director Stephen Ratcliffe said: ‘While there was a slight upturn in construction output in the fourth quarter, conditions in the sector remain difficult.

‘There is an urgent need to speed-up the delivery of infrastructure projects, and provide some clarity on levels of future capital spending to build industry confidence”.

Construction over the decade

UK construction activity grew strongly at the start of the period before a slight fall in 2005 and 2006. Construction activity then recovered so that it was around 20 per cent higher at the end of 2007 compared with the start of 2001.

The deterioration in economic conditions during 2008 had a large effect on the construction and production sectors, but the effect on the service sector was less pronounced.

Construction activity saw a more marked increase than that of production in 2010. However, this

was not sustained with activity falling from the final quarter of 2011 due to on-going financial market strains and a deteriorating economic outlook.

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