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Government must provide capital boost, says CPA

A large plurality of contractors experienced a poorer final quarter of 2011 compared with the same period the year before.

According to the quarterly Construction Trades Survey, which collects data from five separate construction reports, a balance of 37 per cent of respondents reported a fall in output in the period.

The Construction Products Association, which compiled the data, took the opportunity to urge a capital injection from government and warned failure to do so would precipitate an even worse 2012.

According to the data, SMEs were particularly hard hit at the end of last year. However, the civil engineering workload balance showed more positive signs with a positive balance of respondents reporting an uptick for the first time since the beginning of 2008.

Noble Francis, CPA economics director said:  ‘Cuts to public sector capital budgets had a tangible impact on activity across the construction supply chain, exacerbated by economic uncertainty and a lack of lending.  As a consequence 2011 Q4 was very challenging for the industry.

“However, of even greater concern, previously positive workloads in sectors such as commercial and private Housing have now become negative. Furthermore, prospects for the industry in 2012 are poor with sharply deteriorating order books and enquiries.

‘The only bright spots appear in exports and infrastructure. Yet this is unlikely to be sufficient to offset all the other sectors in which workloads are declining.  As a consequence, instead of being a driver of growth in the UK, construction is likely to hinder economic recovery this year unless the Chancellor takes steps in next month’s Budget to stimulate the industry and the economy as a whole.”

Stephen Ratcliffe, Director UKCG, said: “Business conditions remain challenging but there are also still opportunities for the industry. UKCG is working with government to help ensure the pipeline of public sector projects announced at the time of the Autumn statement is translated into reality and that we help deliver the best possible value to a cash strapped public sector to ensure some continuity of work.”

Julia Evans, Chief Executive of the National Federation of Builders added: “With energy and material costs up, confidence down and lending conditions set to deteriorate further through 2012, it is hard to see how much of the industry will survive if these conditions are sustained.

“Marquee projects such as the Olympic Stadium will always give the impression of a vibrant industry but the vast majority of firms will only be able to survive for so long with cutthroat competition for work, unreasonable credit rates and late payment before they join the 2,700 construction firms that went into administration in 2011.”

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