No construction recovery until 2011

Following the sharpest fall in construction output on record, the latest forecasts from the Construction Products Association do not anticipate any recovery in the industry’s fortunes until 2011.

Despite some encouraging signs that the wider economy may be coming out of recession and that the housing market is beginning to recover, the Association forecasts that construction output will fall 15% this year and a further 2% in 2010, before beginning a slow recovery from 2011. This latest forecast points out that even with trend growth in the industry in the years after 2011, it would take until 2021 for construction output to reach the levels last enjoyed in 2007.

Commenting on these latest forecasts, Michael Ankers, chief executive of the Construction Products Association said: “There are signs that the private housing market is beginning to pick up although the recovery is expected to be slow and from historically very low levels. However, even with this new optimism the total number of houses expected to be built in the two years 2009 and 2010 will only equal the number built in the year before the credit crunch."

Key aspects of the forecasts are:

• Private housing starts will grow steadily throughout the forecast period, reaching 148,000 in 2013

• Commercial new work is falling very sharply and by 2010 is expected to be less than half the size it was just two years earlier

• Construction of factories and warehouses is expected to fall almost 60% between 2007 and 2010

• Public investment in schools and hospitals remains strong in 2009 and 2010, but is anticipated to fall sharply in the following years

• The infrastructure sector is expected to grow significantly throughout the forecast period, reaching an estimated £10 billion in 2013.

“Government spending on construction projects in the short term remains strong and without this the industry would be in a far worse position,” said Ankers. “We remain very concerned that any significant cut-backs in capital spending after the Election will prolong the downturn as it will be some time before we expect to see significant growth in private sector commercial projects.

“One bright spot for the industry is government spending on infrastructure, which we see remaining strong throughout our five-year forecast period, with commitments to the rail network, a new five-year programme for investment in water and, towards the end of the period in particular, the start of major investments in new energy supply.

“Following the publication of these forecasts the Association will continue its dialogue with the main political parties to ensure they recognise the construction industry is key to sustaining employment and bringing the economy out of recession.”