The State of the Construction Industry – Heading for a Perfect Storm

A report by Designing Buildings Wiki shows that the total construction industry output is still 9% down on what it was 10 years ago.

Public sector output has increased by 12% in the last 10 years, whilst private sector output has shrunk by 15%.

This increase in public sector spending, in combination with the beginnings of a recovery in the private sector during 2010 / 2011, meant that by the second half of 2011, total output for UK construction peaked at nearly 5% higher than it had been in 2002.

However, in the first half of 2012, both public and private sector output fell, resulting in total output dropping to a level 9% lower than it was in 2002.

If the public sector continues to shrink at this rate, the private sector will have to grow by more than a third of a billion pounds a quarter just to keep total output at its current level.

If the public sector continues to shrink, and the private sector does not grow to fill the void, the industry will enter a double dip recession.Aus

David Trench CBE, Chairman of Designing Buildings Wiki comments: “Until the beginning of this year, the construction industry had held up pretty well, supported by increases in public spending. But in the last three quarters, public spending has dropped, and if the current trend continues we are headed for a perfect storm.

“Our analysis shows that to make up for public sector cuts, the private sector will have to increase output by more than a third of a billion every quarter just to maintain the current level of total output. The phenomenal level of private sector growth required to actually bring about a recovery could only be achieved through a clear, combined Government/industry investment policy, and it needs to happen now.”12


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