UK construction output down, recession risk

The UK's Office for National Statistics (ONS) has published construction figures for April 2012 showing a fall of 8.5% compared with April 2011.

Commenting on the figures, Noble Francis, Economics Director at the Construction Products Association said: ‘With ONS reporting that both manufacturing and construction sectors fell in April, prospects for the UK economy escaping recession in Q2 are dissipating rapidly. It was unfortunately unsurprising to see the sharp fall in construction output during April, given the extent of the public sector cuts. Public housing output in April fell 10% compared with March and was 23% lower than a year earlier. Public non-housing, which covers education and health, was 13% down on March and 21% lower than a year earlier.

“The government has made much play of private sector construction leading the recovery as the public sector cuts bite but it is clear that this is not the case. Private sector work was clearly hindered by investor confidence, adversely affected by euro zone uncertainty, and this was exacerbated by the poor weather in April. Output in private commercial, the largest construction sector, fell 10% during April and was 3% lower than a year earlier.”

Meanwhile, Julia Evans, chief executive of the National Federation of Builders, said: “The YoY decline of 1.4% in repair and maintenance work in the three months to April is a concern. If the Green Deal, the government’s flagship refurbishment programme, is to have any chance of success, it needs to be more attractive to consumers. A cut in VAT for all refurbishment from 20% to 5% would provide a UK£1.7bn boost to the economy, create around 30,000 jobs and reduce the advantage enjoyed by the cash-in-hand, tax avoiding builder.”