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Construction figures count on a 2012 recovery

The construction sector may be predicted to recover in 2012, but even by 2013, the sector will not have sufficiently recovered to hit the growth levels enjoyed in 2007, says the Construction Products Association.
The latest figures released by the CPA, highlight a tough next few years for the construction sector.

Housing starts fell 43% in 2008 and are expected to fall by a further 32% in 2009. And, the sector is forecast to see housing starts in 2013 that are 20% lower than levels seen during 2007.

Office construction alone is expected to fall 50% in the next two years. The commercial sector is predicted to fall by 17% in 2009 and by a further 14.8% in 2010, but will rise by 1.6% in 2012.

The industrial sector suffered with warehouses' new build falling 30% in 2008. This sector's growth is forecast to fall by 19% in 2009 but will rise again by 5% in 2012.

The private housing sector is set to fall by 34% in 2009.

Social housing, schools and hospitals is tipped to enjoy good growth throughout, thanks to public sector spending. Public sector housing growth is predicted to increase by 6.7% in 2009, and by 9.4% in 2010. Non-housing public sector work is forecast to rise in 2009 by 17.5%.

Forecast public borrowing in 2009 is £118 billion GDP, but this is expected to fall by 2012 to £70 billion. The CPA warned in its report: 'With public borrowing reaching unprecedented highs in 2009, it is doubtful whether this level of spending is sustainable in the long run'.

Overall repair and improvement work will drop in 2009 by 6.7% and by a further 3.8% in 2010.

According to the January Glenigan Index, published monthly, new construction projects was down 19% in December, when compared with a year ago.

“The fallout from the credit crunch means access to project finance remains very difficult, even for those developers with a sound financial position,” said Allan Wilén, economics director at Glenigan.

The index tracks the monthly flow of UK construction projects valued from £100,000 up to £100 million starting on site.

“Glenigan has recorded a major contraction in the value of projects obtaining planning approval which will have a significant impact on the flow of new projects during the first half of 2009.”

The index showed the south east and Northern Ireland registering slight improvement in the value of new construction starts. However, the North East and East Midlands were the worst-hit regions, with the value of new construction starts falling by more than a third, compared to a year ago.
12 January 2009

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