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It’s official: we are back in recession

25 Apr 12 New GDP figures from the Office for National Statistics show that the UK economy and its construction industry returned to recession with a fall in the first quarter of 2012 of 0.2% for the economy as a whole and 3% for construction.

 With a 5% contraction in the construction industry in the past six months, the industry has lost the gains that it made in 2011.

Commenting on these figures, Construction Products Association economics director Noble Francis said: “Given the sharp effects of public sector spending cuts over the past 12 months it is unsurprising to see that construction returned to recession in the first quarter with a fall of 3% following the 0.2% fall in Q4. Furthermore, with new orders for construction falling 14% in 2011, the industry is likely to endure further falls near-term. Our latest forecasts for construction anticipate that the industry will fall considerably this year and remain flat in 2013, severely delaying recovery for the economy as a whole.

“Given that independent economic analysis has shown clearly that for every £ spent in construction, £2.84 is generated for the wider economy, it is essential that government does its utmost to switch its current spending towards the more productive capital spending.”

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Simon Rawlinson, head of strategic research at quantity surveyor EC Harris, said: “The latest GDP figures are clearly very disappointing. Construction was -3% for Q1 2012 and coupled with a revised figure of -2% for Q4 2011 means that the industry has contracted by 5% over the last half year. We have effectively lost the gains that were made in 2011 and repeated the pattern of 2010 when we saw a loss of 9.3% over a six month period.

“Most of the damage was down to poor performance during December and January, which is also a recurring trend to the previous year, when after a poor Q4 and Q1, the rest of the year we played catch up.

“Whilst it is impossible to say exactly where the drop has come from, if you look at the last construction output data, infrastructure was the only area that showed growth, with everything else static or falling.  It is likely that the public sector spending cuts are reflected in this figure, however.”

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