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Fri October 30 2020

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Construction to grow by just 1.7% a year from 2010 to 2014

27 Jan 10 Construction's return to growth over the next five years is likely to be "long and slow", according to the new Construction Skills Network forecast. More...  

Construction cranes<br>Flickr: http://www.flickr.com/photos/markhillary/Construction's return to growth over the next five years is likely to be "long and slow", according to the new Construction Skills Network forecast.

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The CSN, coordinated by sector skills council ConstructionSkills and data provider Experian, shows the prognosis for the UK construction industry in the short term is very severe with construction output expected to have contracted by around 13% in 2009.

The fall in employment in the sector has also been severe with a drop by approximately 375,000 workers from 2008 to 2010 and recoup by less than 100,000 by 2014.

A further, but marginal, decline is projected for 2010, but consistent recovery is not forecast until 2011, with a slow and steady return to moderate levels of growth as confidence returns to the market. Over the whole of the 2010 to 2014 period construction output is expected to average 1.7% growth each year.

As with previous CSN forecasts, there are distinct regional and national variations with the North West down by 18%, North East down by 19% and West Midlands down by 22% in 2009.

Conversely, for the 2010-14 period, the East of England, East Midlands, Scotland and Wales perform the best across the UK in output terms. In large part, the variations reflect when different regions and devolved nations first entered into recession.

In the construction industry so far, the private sector has borne the brunt of the recession, with the private housing sector suffering its second consecutive double digit decline in output in 2009.

Public non-housing work such as the Olympics and the Building Schools for the Future programme saw good growth in 2009 and are likely to provide a significant stream of work in the short term through to 2011.

Mark Farrar, chief executive of ConstructionSkills, said: “The recession has hit construction extremely hard and the forecast recovery is likely to be long and slow. This situation remains fragile and we are concerned that, given the scale of the public sector deficit, potential funding cuts in the period ahead will further exacerbate the loss of skills before private sector investment has fully recovered.

“In a sector which supports some 8% of GDP (£210bn annually) and provides employment for large numbers of graduates and apprentices, stability in levels of long term investment plays a critical part in protecting employment and skills. As the public sector currently accounts for 30% (excluding PFI) of the industry’s business, decision makers will need to take account of the wider economic and employment impacts before acting.”

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