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Construction decline costs industry £8.5bn in two years

£4.5 billion will have been wiped off the value of construction work in 2012 alone due to ongoing output decline, according to the latest Construction Products Association industry forecast.

The CPA predicts a fall in output of 6.3 per cent this year and a further 1.4 per cent in 2013 before the industry returns to growth in 2014.

CPA economics director Noble Francis said: “Construction is currently experiencing sharp falls, both for orders and output as a result of severe cuts in the government’s capital spending, coupled with a very subdued private sector recovery. 

“Construction has already lost £4.5 billion of work this year as the industry returned to recession for the third time in five years. Prospects for the industry going forward are bleak.”

Key findings in the forecasts include:

  • Total housing starts of 118,000 2012, which is fewer than half those needed to match the number of new households being created
  • Public sector construction work to fall 19 per cent between 2010 and 2014
  • Private sector construction work to fall 4 per cent in 2012 but rise by 15 per cent between 2012 and 2016
  • Rail construction set to rise by more than one third by 2015
  • Energy construction set to double by 2016

Mr Francis said that although growth is expected in 2014, “the next 12-18 months are likely to cause considerable pain to an industry that is already reeling from a prolonged decline”. 

He continued: “Considering how important construction is to the economy as a whole, and how many times government has stated that construction is essential for recovery, these latest forecasts will do nothing to improve confidence in the UK economy.

‘With the Autumn Statement less than two months away, it is imperative that government prioritises its spending by switching from current spending to capital investment for essential housing and infrastructure, as well as sorting out the long overdue model for drawing in private investment into construction.

“Otherwise, rather than driving economic growth in the near term, construction will keep the UK economy flat-lining as it has been for the past two years.”

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