Housing Construction First to Experience Double Dip Recession



House Construction forecasts dismal, and likely to be foundation of double dip recession.

House Construction forecasts dismal, and likely to be foundation of double dip recession.

The latest forecasts by the Construction Products Association paint a dire picture – construction will be the first major sector to experience the double dip recession.  Members of the CPA estimate that residential, as well as commercial starts, will drop through the remainder of 2010, and into next year.  This word of caution comes, despite the industry surging for a few months earlier in the year.

Michael Ankers, chief executive of the Construction Products Association, commented on the construction industry, saying:  “In 2009 the construction industry suffered its sharpest fall in output since 1974 and whilst there was a bounce back in the first six months of this year, the figures are deceptive.

“The factors that drove this growth – the short term impact of the last government’s fiscal stimulus; a tentative recovery in the housing market; and the start of a number of major projects in the run up to the Election – are not the basis for a long-term recovery.

“Although 2010 as a whole is likely to be slightly better than 2009, it is very much a year of two halves with construction output slipping back in the second half of the year as a result of growing uncertainty in the housing market and cuts in public spending.

“Looking forward, the industry needs to see strong private sector growth to offset the significant reduction in public investment that we anticipate over the next few years, but as the latest information on new orders for construction work published on Friday shows, recovery in orders for private sector work go nowhere near what is needed to offset the anticipated 18% fall in public sector construction work over the next two years.

“Whilst we can see the prospects for a pick-up in output in 2012 and the following two years, this recovery is going be slow and hold back a more rapid growth in the wider economy.

“Even by 2014, output in the industry will not even have recovered to the levels it experienced in 2003.

“The government’s economic programme must recognise that spending cuts and tax rises alone will not secure long-term economic growth.

“Construction will play a significant part in the recovery, as it provides the essential transport improvements, energy supply and educational facilities the country needs.

“A failure to invest in this essential infrastructure will undermine the international competitiveness of business, increase long-term costs for future maintenance and replacement of essential assets and curtail the prospect of a private sector led recovery on which the UK’s future so critically depends.”

The CPA is fearful it will be 2019 before workloads return to pre recession levels of 2007.

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