Chancellor George Osborne last month announced an extra £5billion of capital investment, to be funded by spending cuts as part of the Government’s national infrastructure plan.
However, the Construction Products Association, is warning that public sector cuts have severely outweighed private sector recovery for construction.
Latest construction output figures for October released by the Office for National Statistics before Christmas show that construction output has fallen both compared to the previous month and to a year earlier, as the long predicted public sector spending cuts begin to bite.
Commenting on the data, Noble Francis, Economics Director for the Construction Products Association said:
‘The release of construction output data highlights that the construction industry is starting to feel the severe effects of sharp cuts in public sector spending. Overall, the construction output fell 2.5% in October compared to the previous month and 2.7% compared to a year earlier.”
‘Output in the private construction sectors was mixed but even so was still not sufficient to offset the extent of the public sector falls.”
‘Despite the announcements made in the Chancellor’s Autumn Statement, 85% of the capital funding ‘boost’ will only be available from 2013/14 and capital expenditure is still falling 16% overall. As a consequence, public sector cuts and private sector uncertainty are set to ensure that the falls in construction output continue with output in the industry is expected to fall 4% next year.
The CPA, which represents the UK’s manufacturers and suppliers of construction products, components and fittings, said that although the Government had correctly recognised that construction recovery was key to economic recovery, currently there seemed little prospect of significant growth in construction output until after 2014.
The sector has an annual turnover of £50 billion and accounts for 44% of total construction output.
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