Construction supports modest economic growth, UK

Construction supports modest economic growth, UK
Published: 26 July 2011

Today’s GDP figures, published by the ONS, show that construction output grew by 0.5 per cent in the second quarter of the year after falling in each of the previous two quarters. Growth in construction over the last three months was a significant contributor to the modest increase in GDP as a whole, but all indications are that this will not continue.

Commenting on these figures, Michael Ankers, Chief Executive of the Construction Products Association said:  ‘These estimates are very much in line with our own industry surveys and the information our members are telling us confidentially. Growth in private sector construction has finally begun to recover and although public sector construction output remains stronger than we had anticipated it is clear that the impact of the public sector spending cuts is still to be felt and is forecast to cause sharp falls later this year.

‘These public sector cuts will begin to hit the construction industry in the second half of the year.  With the continuing economic uncertainty and falling consumer and business confidence, we are forecasting that construction output this year will be slightly lower than in 2010. However, looking further ahead to 2012, we expect the recovery in the private sector still to be insufficient to offset further sharp falls in public sector spending and output next year is expected to be 2.5% lower than in 2011.

‘Construction work is also very much focused in the South East and particularly Greater London where there are major projects such as the Olympics, Crossrail and a number of major commercial developments. Activity in other parts of the country is falling more quickly and we are looking to government initiatives such as the Green Deal to help stimulate the industry, retain construction employment across the country and help the wider economic recovery.’