UK construction double-dip risk

UK construction double-dip risk
Published: 07 September 2010

The UK construction industry is heading for a double dip recession, according to the latest industry forecasts published by the UK-based Construction Products Association (CPA) on September 6.

The CPA foresees that construction will be the first major sector to fall back into recession following a temporary recovery in the first half of this year.

In the second quarter of this year the construction industry output of the UK jumped 8.6 per cent quarter on quarter, the strongest rise since the second quarter of 1963.

 However, despite this strong growth, the forecasts suggest that output will fall in the remainder of 2010 and the decline will continue into the first part of 2011.

British construction output is expected to rise by one per cent this year, before a combination of sluggish economic growth and sharp public sector cuts announced by the government starts to make its impact felt more clearly. The output of the construction industry is forecast to fall once again during 2011. 

The CPA said the recovery is anticipated to begin in 2012; however, even if the industry grows at its long-term trend every year afterwards, it will only return to the 2007 level of output at the end of the decade.
Construction output fell by 12 per cent in 2009, the sharpest fall since 1974. 

Meanwhile, the CPA stated that 2010 have seen the worst fall on record for the industry without the public sector’s fiscal stimulus, which boosted investment in public construction and transport infrastructure.