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Construction faces 30 year low

The construction industry is set for its biggest decline in nearly 30 years, the Construction Products Association (CPA) claimed today.

Output is forecast by the CPA to fall by nearly 9% in 2009 and a further 4% in 2010 – a greater fall than at any time since the early 1980s – with output unlikely to increase again until the second half of 2010.

Other key aspects of these latest forecasts include new construction falling 10% in 2009, no recovery in total construction output until 2012, but rail construction work to increase 190% over the next five years.

"The speed of decline is having a dramatic effect on many parts of the construction industry and is being driven by an unprecedented reduction in private sector investment resulting from the credit crunch and economic downturn," said CPA chief executive Michael Ankers.

"The only sectors where construction output is forecast to increase are linked to public spending. The Building Schools for the Future programme has finally got off the ground and spending on education projects is expected to grow by 28% over the next two years.

Construction activity in the health sector will remain strong and we are also forecasting an increase in construction output on infrastructure projects throughout the forecast period with the Crossrail project playing an increasingly important part towards the end of our forecast period."

The CPA's comments came as market intelligence firm Glenigan's monthly index of construction projects valued from £100,000 up to £100M revealed the number of UK construction projects starting on site was at a two year low in December, down 19%.

The decline was consistent across nearly all of the UK with only the South East and Northern Ireland showing a slight improvement in the value of new construction starts. In comparison the North East and East Midlands have been the worst affected regions with the value of new construction starts falling over a third on a year ago.

More positive new comes from the Civil engineering index which has improved 16% compared to a year ago due to the start of several renewable energy projects. While the sector is likely to face a difficult 2009, several water and energy utilities companies are set to press forward with their investment programmes in the New Year.

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