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Construction heads into second recession?

Fears are growing that construction is sliding into a second full-blown recession after the latest Government GDP figures were released today.

Construction output fell 0.5% in the last quarter of 2011 and manufacturing output fell 0.9%.

The figures show that the UK economy has fallen by 0.2% in the final quarter of 2011 following growth of just 0.6 per cent in the previous two quarters.

Noble Francis, economics director at the Construction Products Association, said: “The GDP figures released today show that the final quarter of last year was extremely difficult for the economy, in which both construction and manufacturing had a significant effect.

“Unfortunately the prospects looking forward are even worse, as construction is expected to fall a further 5.2 per cent during 2012, exacerbating the problems in an industry that has already lost 300,000 jobs, and severely hindering growth for the economy as a whole.

“Undoubtedly the problems in the euro zone have increased uncertainty in the private sector making investors highly risk averse to investment. However, this does not tell the whole story as Capital Investment from the public sector, which accounts for more than one-third of total construction activity, will have fallen 30% by the end of 2013. As construction has been highlighted by government as essential for recovery, the decline is severely harming prospects for the sector as well as constraining overall economic growth.”

About Fiona Russell-Horne

Group Managing Editor across the BMJ portfolio.

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