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New starts slump 35pc year-on-year

New construction projects starting on site fell by over a third for the three month leading up to April 2009 compared with the same period a year earlier, according to the latest figures from business intelligence firm Glenigan.

New project starts fall 35 per cent on a year ago with non-residential and housing project starts being the worse hit, falling by 39 per cent and 52 per cent respectively.

Across the country the picture was fairly bleak with the north of England experiencing some of the sharpest falls in the value of project starts last year, the Midlands, the east of England, London and the South-east experienced the largest declines during the first quarter.

The decline in residential project starts has been driven by private housing and prospects are forecast to deteriorate over the next two quarters as house builders focus on selling stock and reducing work in progress in the face of worsening UK economic conditions, falling house prices and limited mortgage availability.

However, there is some encouraging news for certain sectors with civil engineering experiencing a rise of 20 per cent in the beginning of 2009 with several road and energy projects starting on site during the first quarter.

The forecast for sector remains positive for the rest of the year, driven by new renewable energy projects and spending on rail and road infrastructure.

Glenigan economics director Allan Wilén said:“Residential construction projects are expected to deteriorate further over the next two quarters, prospects for non-residential projects are mixed and the outlook for civil engineering is expected to be positive throughout 2009.”