MPA figures highlight need for UK construction investment

Published 30 April 2012


The UK's Mineral Product Association (MPA) results for the first quarter of 2012 indicate a substantial reduction in sales of aggregates, ready mixed concrete and asphalt, confirming the latest GDP figures which show that declining construction activity has dragged the UK back into recession.
 
Compared with the same period of 2011, sales volumes of crushed rock and sand and gravel aggregates declined by 13% and 12% respectively in the first three months of 2012 and sales volumes of ready-mixed concrete and asphalt fell by 9% and 17%. These products represent by far the largest flow of materials into construction markets and are used extensively throughout the construction sector. The figures follow a slightly positive overall performance in 2011 and suggest that construction activity is now in decline following some recovery from the depths of the recession in 2009.
 
Jerry McLaughlin, Chief Economist MPA, commented: “These figures represent real deliveries of materials to construction projects, not opinion survey data, and they indicate that there is a real likelihood that construction activity will fall away and constrain economic recovery as we move through 2012 and 2013.

“There has been some criticism of the ONS data released on Wednesday (25 April) which showed a 3% first quarter decline in construction compared with the fourth quarter and lower activity than the first quarter of 2011. These official figures are provisional, but they reflect just what our industry is experiencing on the ground.

“Outside the strong construction markets of Greater London and parts of South East England, lack of demand is becoming critical as public investment in construction falls away and there is little private sector construction growth to fill the gap.”
 
Government is of course right to focus on deficit reduction and maintaining financial credibility, but MPA believes it is now necessary to take the opportunity to drive economic recovery throughout the UK with a sustained increase in  investment in infrastructure and social housing.

Away from major projects, such as Crossrail, there is great potential to invest in many road and transport schemes which would materially boost local and national economies and there is a growing housing crisis which needs the delivery of tens and hundreds of thousands of social and affordable homes.

Government started this process with additional infrastructure provision in the Autumn Statement and the Autumn announcements to boost private housing markets. These were very welcome but the scale of the economic challenge means we should be looking to double or triple investment in these areas - there is economic and construction decline throughout much of the UK which needs substantial and urgent action to turn around. An emergency programme of investment in key transport infrastructure and housing would be an appropriate and credible policy response.