Construction recession could last until 2014

Fears of a lengthening recession in construction grew this week as research by analysts Hewes and Associates suggested the industry would not return to growth until 2014.

The prediction came as GDP figures from the Office of National Statistics show construction output fell 3.3% in Q4 of 2010, the largest drop since the height of the recession in early 2009.

The construction figures dragged down overall GDP, which fell 0.5% in the last quarter of 2010.

The surprise drop has increased fears of a double-dip recession.

Hewes also published a downbeat outlook for the sector for the next three years.

It forecast output will fall 3.5% in 2011 and drop a further 5% in 2012.

This compares with Experian’s forecast earlier this month of a 3.6% drop for 2011 and a 0.4% contraction for 2012.

Hewes also expects a marginal contraction of 1.3% in 2013, whereas Experian expects a return to growth of 5%.

Government cuts will bring an end to the construction recovery, the report said, after public spending contributed 65% of the growth in 2010, and the sector will contract for a second period.

Noble Francis, economics director at the Construction Products Association, said: “The GDP figures are really not good.

“This is particularly concerning because the effects of the public sector cuts aren’t hitting the construction sector yet.”

Alasdair Reisner, head of industry affairs at the Civil Engineering Contractors Association, said: “The weather [in December] has clearly had an impact but if there was underlying strength in the construction sector then the figures wouldn’t have been as bad.”