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Contractors World UK & Ireland
2012 Vol 2 No 6   
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Construction News - Economics Business - Regulations

Is indecision putting the construction industry at risk? - Page 3 of 4

Results from CECA’s 2012 Q2 Workload Trends Survey show that a fledgling recovery in the sector earlier this year has been stamped out, as output in the sector fell back into the red.

High-speed rail planning is so far in the future as to be farcical for an industry in state of decay.
Photo: -David Anstiss

20% of companies report decline

Twenty percent more firms reported declining activity than those reporting gains, sending workloads into negative territory after two previous quarters of growth.

The two most important sectors for CECA member companies - roads and preliminary works - both saw alarming declines in activity. Workload balances for motorways and trunk roads fell by 53% compared with a year ago, while the equivalent figure for local roads declined by 42% in the same period. Preliminary works - which are a prerequisite to house-building - declined by 7%.

Commenting, CECA director of external affairs Alasdair Reisner said: “The government has rightly placed infrastructure provision at the centre of its growth strategy. These alarming figures show that this strategy has stalled.
“Despite strong performance in the regulated sectors, efforts to stimulate activity across the wider infrastructure industry are not feeding through. Companies have reported a collapse in workload that will mean the construction sector continues to act as a brake on the rest of the economy, preventing a return to growth.

“These are alarming signs for those who have identified infrastructure as the primary driver to effect recovery. Currently, the industry is not just stuck in second gear - it is actively reversing.

“The government needs to act immediately if the infrastructure sector is to fulfil its potential as a driver towards recovery. More can be done to give the economy a much-needed ‘shot in the arm’ via the construction sector, through the unlocking of stalled projects, and particularly targeted investment in maintenance and minor work activity - both of which would raise output rapidly. We also want more to be done to allow the immediate flow of private finance into the sector.

“Until action is taken, the alarming signs are that a double-dip recession in the sector will take hold. This is bad news for jobs and growth, and for the government’s overarching aim of deficit reduction.

“The industry has the potential to jump-start the economy. It is time for the government to turn the ignition.”

Half glass full syndrome. Reduce traffic and emissions by allowing roads to be unsafeConstruction Industry Facing Two More Years of Decline

And if the situation is somewhat overcast right now, it does not look like there is any sunshine in the forecast, just more doom and gloom. Even the English weather is well below par.

Half glass full syndrome. Reduce traffic and emissions by allowing roads to be unsafe
Photo: David Wright

Construction output is forecast to fall by almost 6% over the next two years, before a return to growth in 2014, according to the latest Construction Industry Forecasts from the Construction Products Association. The majority of this decline is a result of the cuts to the capital budget and is being exacerbated by a lack of recovery from the private sector which will experience virtually no growth over this same period.

Once recovery starts in 2014 there will be a rapid rise in activity and growth is expected to remain buoyant for the foreseeable future, but until then construction is likely to have a significant drag on the UK economy as a whole, despite numerous government initiatives, which to date have had little impact in reinvigorating the economy.

Commenting on these forecasts, Noble Francis said: “Between now and 2014, total construction is expected to lose £10 billion as public sector construction activity falls away sharply. Although this has been expected for some time following the government’s deficit reduction plan announcements, the hoped for recovery in the private sector, which was expected to offset these falls, has not materialised.

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Publisher: Roger Lindley
Content compiled and edited by:
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Page updated: August 2012

 

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