Construction downturn a 'wake-up call' to government

Official figures have shown construction output fell by 3.3 per cent in the final quarter of 2010 while GDP fell by 0.5 per cent.

The Office for National Statistics preliminary estimates showed construction output was 6.9 per cent higher in Q4 2010 than in the same quarter a year earlier, but had decreased on the previous quarter.

Construction Products Association chief executive Michael Ankers said the figures were evidence that any recovery in the sector had now “petered out”.

The CPA’s most recent forecast predicted construction output will fall a further 2 per cent in 2011.

Mr Ankers called on the government to do more to encourage a private sector recovery.

He said: “After two quarters of relatively strong growth in the middle of 2010, these latest figures show that the economic recovery has stalled even before the full impact of the public sector spending cuts is felt,” he said.

“Although the poor weather in the last few weeks of the year undoubtedly had an impact on the construction industry, as it did in 2009, it is clear that the recovery in the industry has already petered out and that private sector growth is not coming through strongly enough.”

He said government should “accelerate the measures it is taking to reduce the burdens on business, encourage the banks to make more money available for viable business investment and implement the measures it is committed to for improvement to the infrastructure of this country”.

The Civil Engineering Contractors Association said the figures demonstrated the critical role that construction plays in the UK economy.

CECA director of external affairs, Alasdair Reisner said: “This morning’s shocking GDP figures should act as a wake-up call. It is clear that a downturn in activity in the industry has an impact that is felt far beyond the site fence, acting as a brake on the country’s ambitions to return to growth.

“While there have clearly been seasonal factors that have played a role in the reduction in construction output last quarter, the results also reflect a continuing negative outlook that has been reported by companies from across the industry.

“Sadly there seems to be little in the way of confidence that there will be a turnaround in the industry’s prospects in 2011, and with the full effect of public sector cuts yet to feed through, there may very well be further bad news to come in future quarters.”

Chancellor George Osborne said: “These are obviously disappointing numbers, but the ONS has made it very clear that the fall in GDP was driven by the terrible weather in December. We have had the coldest weather since records began in 1910 and this has clearly had a much bigger impact on the economy than anyone expected.”

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