Construction Products Association report says industry is lagging behind the UK economic recovery

The construction industry is lagging behind the UK economic recovery and will remain in recession until next year according to the latest forecast by the Construction Products Association (CPA).

The most recent GDP figures indicate that the economy has grown 0.2% in the first quarter of 2010. However, the CPA forecast highlights a fall of 3% in construction activity during 2010 following last year’s 12% fall; the industry’s worst decline in more than 35 years.

By the end of 2010, it is anticipated the construction industry will have lost £16bn of work in three years.

According to the CPA, at around 9% of GDP, construction is an essential part of the UK economy and if it remains in the doldrums, recovery for the economy as a whole is likely to be slow and protracted.

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

CPA 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.

Michael Ankers

He said: “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.

"The benefit of construction to the economy is well documented - for every £1 spent on construction, the economy benefits by £2.84.

"So, 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% of GDP our public services will begin to deteriorate and economic recovery will be delayed”.

Despite the pessimistic forecasts, the CPA predicts work will increase in some sectors, such as private housebuilding, where growth of 32% 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.

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