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Contractors demand government action after figures show industry in worse state than thought

The Civil Engineering Contractors Association (CECA) has called for government to act after publication on Friday of worse-than-expected construction output figures by the Office of National Statistics.

The figures show that the total volume of construction output in the first quarter of 2012 fell by 4.8 per cent, compared with the fourth quarter of 2011, which suggests that the UK’s economy contracted by 0.3% in the first quarter of 2012, rather than the 0.2% previously estimated.

The infrastructure sector showed the largest decrease of any sector. The volume of new infrastructure output in the first quarter of 2012 was 15.9% lower compared with the previous quarter and 10.0% lower compared with the same quarter in 2011.

CECA director of external affairs Alasdair Reisner said government must act now to restart stalled projects and redouble its efforts to unlock alternative funding sources.

“These disappointing figures - the worst figures for two years - show that the UK’s construction industry still has a mountain to climb,” said Reisner. “The outlook for the sector remains extremely challenging with no guarantee that further declines can be avoided. The industry requires continuing support, given the short and long term benefits it brings to the economy in terms of jobs and growth.

“For civil engineering contractors to play their part in delivering the infrastructure on which British businesses depend, and in doing so play their part in returning the economy to growth, the government must enable the establishment of new models of infrastructure funding with urgency, and continue to push to unblock stalled projects.”

Turner & Townsend MD Steve McGuckin agreed that without action the next two years look grim.

“Most disappointing is the steep fall in new infrastructure work, though this is perhaps unsurprising given the government’s drive to cut the deficit,” said McGuckin.

But McGuckin warned that any government action will not yield quick results.

“Any recovery won’t happen overnight. This is a long-lag business, where it frequently takes two or more years from the time a project starts moving to construction beginning.

“So we predict the rest of 2012 will be tough, with volumes not picking up significantly until well into 2013,” he said.

“For now, even though the orders are trickling through, competition on price is intense and the challenge for contractors is to keep on top of their cash flow.”

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