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Construction industry has lost £16bn of work in three years

The construction industry will have lost £16 billion of work over the past three years by the end of 2010, according to the latest forecasts from the Construction Products Association.

The latest forecasts highlight a fall of 3 per cent in construction activity during 2010 following last year’s 12 per cent fall; the industry’s worst decline in more than 35 years.

Growth is not expected to return until 2011 and even then it is forecast to be relatively subdued at just 1 per cent per year is 2011, 2012 and 2013.

Yet, despite the pessimistic forecasts, the Association predicts work will increase in some sectors, such as private house building, where growth of 32 per cent is expected between 2010 and 2012.

In addition, construction activity is forecast to be boosted by infrastructure work in the regulated sectors of rail, water and energy.

Construction Products Association chief executive Michael Ankers said: “This is not good news for the industry or the wider economy.

“The construction industry is such a major part of the economy that it is hard to see how there can be a strong recovery whilst construction remains in recession.

“Despite the post election spending cuts, the next government must understand the long-term significance of its actions; if capital spending falls below 2.25 per cent of GDP our public services will begin to deteriorate and economic recovery will be delayed. 

“Furthermore, the industry also provides essential public sector projects such as roads, rail, and energy infrastructure, as well as modern, efficient and low carbon buildings that are key to a sustained recovery in both the manufacturing and service sectors.”

Key points in the Construction Products Association forecasts are:

  • Construction output is expected to decline 3 per cent in 2010 before 1 per cent growth in 2011
  • Industry growth only returns to trend levels of 2 per cent in 2014
  • 32 per cent growth in private housing starts between 2010 and 2012.  Despite this increased level of housing starts, 2012 will be one of the lowest years for housing starts since 1946
  • The industrial sector to grow 8 per cent in 2011 following a 49 per cent fall in output during the preceding three years
  • Commercial sector output to return to growth in 2011, of 4 per cent, following a 41 per cent fall in output during 2009 and 2010
  • Infrastructure sector set to grow 42 per cent by 2014 with work on rail construction more than doubling in just five years