Engineers warned that a fall of 4.7% in construction output last quarter threatens to undermine the small growth in the UK economy of 0.5% that was revealed today.
The Association for Consultancy and Engineering (ACE) said that the UK risks being left behind and called for swift action to unlock greater investment in infrastructure while the Civil Engineering Contractors Association (CECA) said the small rise in GDP masks the continuing weakness of the construction sector.
The ACE said the results mean that, technically, the construction sector is in recession. Although construction output has increased compared with a year ago, construction has experienced quarterly growth in only three of the last twelve quarters. CECA said that accounting for around 10% of total GDP output, the
weakness in the construction sector cannot be ignored by policymakers, as it will continue to act as a serious drag on overall GDP figures until a full recovery is established.
In addition, CECA said the willingness of firms and individuals to invest in construction is a major marker of their confidence in the future of the economy, so decline in construction should serve as a major concern.
“With government finances tight, only private sector investment can help deliver a recovery in the construction sector, and at present their actions speak louder than words,” said CECA director of external affairs Alasdair Reisner. “At the moment there is not enough confidence in the UK’s economic recovery to justify the risk of new projects.”
“While we welcome much of the government’s recent work on construction, in the Budget and through the work of Infrastructure UK, these figures demonstrate that this is no time for government to take their foot off the gas. Reforms need to move quickly from proposal to action if the construction sector at large is to begin contributing to the economic recovery, rather than slowing it down.”
ACE chief executive Nelson Ogunshakin added: “The contraction in construction output is deeply worrying, and requires urgent attention to change direction. The UK government has stated its desire to go for growth. Without a thriving construction industry it is unlikely that the recovery will be sustainable in the long term.
“Countries such as the United States are taking action to invest in vital infrastructure as a means of recovering from recession. The UK needs to step up the pace of reforms to encourage more private and public investment in infrastructure, property and the natural environment to stimulate economic growth. Otherwise, the UK risks being left behind.”