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Recession watch: Bleak forecast for UK construction

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The Construction Products Association (CPA), the body representing UK manufacturers and construction suppliers, has warned that the sector will have to ‘wait for at least another 12 months’ before seeing signs of sustained recovery.

The CPA predicts the building and construction sector will be dragging its heels to emerge from recession, claiming that it will contract by a further 3 per cent in 2010, on top of a massive 12 per cent contraction in 2009.

Low levels of activity in the private and industrial sectors, twinned with a general election year, which will also see proposed cuts in public spending, paint a bleak picture for the nation’s tradesmen, who will have to wait until 2011 to see a return to pre-recession business activity levels, according to the CPA.

Association chief executive Michael Ankers said: ‘Construction has been one of the sectors of the economy worst hit by the economic downturn, and while it is widely believed that the wider economy is now out of recession, the construction industry is going to have to wait for at least another 12 months.

‘The major concern for the industry is public investment in construction where work on the major hospital and schools programmes has helped save the industry from even more dramatic falls in output.

‘There is a real danger what we anticipate as being a three year downturn will extend even further’

‘Looking ahead, however, the recent Pre-budget Report confirmed that there would be sharp cuts in government capital spending over the next three years, and if these occur before there is any significant recovery in private sector construction, then there is a real danger that what we currently anticipate as being a three year downturn will extend even further’.

He continued: “The construction industry is a major part of the economy and it is hard to see how there can be any significant recovery whilst construction is still in recession.

In addition, what the industry provides in terms of roads, rail, and energy infrastructure, as well as modern, efficient, and low carbon buildings, is key to a sustained recovery in our manufacturing and service sectors. In the run up to the general election, it is critical that the major political parties recognise these points and ensure they are reflected in the policy proposals they put before the electorate.”

As well as the 3 per cent contraction in the sector in 2010, the CPA also predicts that even by following optimistic growth trends of 0.5 per cent per year, the number of housebuilds in 2013 will be only three quarter the levels seen in 2007. At this rate of growth, it would take until 2021 for activity to return to 2007 levels, according to the CPA.

However, the CPA forecasts a strong recovery in housing repair and maintenance from 2010 onwards fuelled by a strengthening economy and lower unemployment levels, while consistent growth in infrastructure, namely rail, road and nuclear projects, will help support the sector in the coming years.

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