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Construction to lose £2bn in 2013

Construction shrank by over £9bn last year and will contract by another £2bn this year, according to new forecasts

The Construction Products Association’s forecast update said the industry would not start to grow until 2014 when it would expand by a 2 per cent.

Construction’s largest sector, commercial, is forecast to contract by 5.7 per cent this year and hit its lowest output levels since 1997.

Within the commercial sector, retail is expected to fare especially badly with the value of work falling by 10 per cent in 2013 as chains including John Lewis and Sainsbury’s scaled back spending plans. The association also predicted that office building work would shrink by 2.1 per cent this year.

Private housebuilding numbers are expected to rise 6 per cent in 2013, boosted by the government’s Funding for Lending scheme, but they are still about 46 per cent below 2007 levels.

The association said total housing starts for the public and private sectors in 2013 would be 122,000, which is fewer than half that needed to accommodate the number of new households.

Infrastructure is expected to grow by 7.4 per cent this year and will continue to expand by over 6 per cent a year until 2016 with Crossrail and Network Rail contracts a key contributor to the sector.

The value of roads work is expected to have fallen 45 per cent in 2012 but will bounce back by 8 per cent this year following pledges of £1.3bn for the sector in the Autumn Statement.

The association revised down many of the predictions it made in October because of worsening economic conditions and additional data showing that poorer than expected construction performance.

It estimated that the contraction in 2012 and 2013 would be £6.4bn greater than predicted in its October forecast. Similarly it now expects the amount of work done between 2012 and 2016 to be over £20bn lower than previously anticipated.

Noble Francis, economics director of the Construction Products Association, said: “Public sector construction work continues to bear the brunt of the government’s austerity drive and has fallen by 15 per cent over the last two years. Our forecasts show that it is expected to continue to fall by a further 7 per cent this year. Unfortunately, growth from the private sector, which government hoped would compensate for this decline in public sector activity, has not materialised and it too continues to contract.”

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