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Construction helps drive economic upturn

25 Oct 13 Construction’s 2.5% growth in the third quarter of 2013 helped the overall UK economy grow by 0.8% over the same period.

The 2.5% increase in construction contributed 0.15 percentage points to the increase in gross domestic product, the Office for National Statistics said.

New work on private housing and private commercial were key contributors to this increase, and there was also growth in private housing repair and maintenance.

The GDP growth follows a 0.7% rise in the previous quarter, and is the best quarterly performance since 2010.

Commenting on the figures, Construction Products Association economics director Noble Francis said:  “The GDP figures released today show that construction was a key contributor to UK economic growth in Q3 for a second consecutive quarter.  This adds to increasing optimism that the industry is recovering from its worst recession in 35 years.

“The construction sector rose 2.5% in Q3 primarily due to private house building, boosted by Help to Buy, and infrastructure, driven by work on Crossrail, which is Europe’s largest construction project.

“Although output in the sector still remains 12.5% lower than it was five years ago, today’s GDP figures point towards recovery for the construction sector and the wider economy.”

Julia Evans, chief executive of the National Federation of Builders (NFB), said: “The latest GDP figures demonstrate that recent growth is not a short-term spike but a longer term return to growth in the construction industry and the economy as a whole. Construction is playing its part in helping the economy to grow but more needs to be done to avoid an unsustainable boom.

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“The NFB hopes that the government will help to foster sustainable economic growth in this sector by boosting access to finance for SME construction companies, taking further steps to reduce planning red tape and providing a much needed boost to the domestic repair and maintenance sector. Government and industry must ensure the chancellor does not bow to political pressure and cut the energy companies obligation (ECO) in his autumn statement.

“Everyone wants a warmer home and lower energy bills but cutting the ECO will put an end to the only major retrofit scheme making an impact on boosting construction growth. Equally, if the government wants the Green Deal to work and help cement economic recovery, it needs to act now to ensure its survival by giving the scheme a financial stimulus and taking steps to educate the public on the scheme.”

She concluded: “The government needs to let builders get on with what they know best – building more new schools, factories and hospitals for councils and businesses across the UK. For house builders, while the NFB welcomes moves to free up buyers to buy, it is now time to free up builders to build with clearer planning processes, better access to finance and an end to excessive regulation.”

Steve Murphy, general secretary of construction union UCATT, said: “The growth in construction is welcome but workers won’t forget that this recovery is three years late and it will take years to return to 2007 levels. The industry was recovering in 2010 before government cuts choked growth. That resulted in thousands of workers losing their jobs and those in work seeing their wages shrink.

“Construction needs a clear infrastructure plan so that all regions can benefit from growth. The industry needs to grow at a steady rate so that we have a long term recovery and not a short-term bubble.”

Chancellor George Osborne said: “Today’s GDP figures show that Britain’s hard work is paying off and the country is on the path to prosperity. Many risks remain, but thanks to our economic plan, the recovery now has real momentum. All parts of the economy are growing, the deficit is falling and jobs are being created.”

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