Construction set for record 12% fall

The UK construction industry will see its worst fall in output ever this year – 12%, according to the Construction Products Association’s latest set of forecasts. Any significant positive growth is not expected until 2012.

Released yesterday, the forecasts expect a fall in housing starts to 70,000 in 2009, the lowest

number of housing starts since 1924, excluding World War II.

The Association has also revised its forecasts for 2010 to 77,000 and, despite double-digit growth each year thereafter, housing starts in

2013 are still expected to be 17% lower than they were in 2007.

Overall, forecasts for the private rm&i sector are in line with the Association’s previous forecast. Output is expected to fall 15% during 2009 and a further fall of 5% in 2010 as the deteriorating economy and sharp increases in unemployment lead to significantly lower consumer confidence. Any recovery is likely to occur only after an upturn in the economy and falls in unemployment during the second half of 2011.

The Association forecasts that public housing starts will fall 20% in 2009 before growth over the rest of the period but starts are still likely to be only around half the government targets by 2011. The forecast period ends in 2013 with construction output still expected to be below levels experienced in 2002.

Noble Francis, economics director at the CPA, said: “The current economic recession is now having a major impact on our industry and this is the most serious downturn most of us in the industry have ever experienced.

“We have already lost 60,000 jobs with more expected to follow and an estimated 12,000 construction workers on short time working.”

The commercial sector is unlikely to fare well either according to the forecast with output expected to drop by 53% in the new build market over the next two years, and 40% in new retail construction.

Francis continued: “The government’s attempt to revive the financial sector, combined with various fiscal stimuli, has left public borrowing at unprecedented levels. Any upturn in construction will be critically dependent upon an increase in credit availability in the private sector.

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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