Economists warn of double-dip recession

Construction output will fall more steeply over the next two years than previously predicted, the Construction Products Association said this week.

The CPA’s autumn forecast, published on Monday, revised down its predicted growth figures to put them further into the red in the face of continued economic uncertainty, government spending cuts and the eurozone crisis.

In its summer quarterly forecast the CPA had estimated that industry output would fall 0.5% in 2011 and 2.8% in 2012.

Now, the CPA predicts that output will fall 1.1% this year and a further 3.6% next year.

Output is only expected to return to growth in 2014 at 3.7% with 4.7% anticipated in 2015.

Noble Francis, economics director at the CPA said: “People should be more concerned than they were three months ago. Public sector [work] is falling away as expected but private sector is not coming back to replace it.”

Simon Rawlinson, head of strategic research at EC Harris, said the figures pointed to a double-dip recession in the industry. “Back in 2000 you would have one sector that would slow down but now within every sector there are areas holding back growth,” he said.

Chris Gilmour, marketing director at Bam Construct, said: “We’re going to just batten down the hatches and do good quality work for those contracts we do get and wait for the market to return. It’s not very exciting but it’s about all you can do.”

The CPA said the biggest opportunities over the next four years remained in rail and energy infrastructure. The rail sector is expected to grow 77% over the next three years.

Housing is expected to fare slightly better than other sectors too, growing 3.5% this year before falling 2.8% in 2012. Brian Berry, director of external affairs at the Federation of Master Builders, called for government action such as a mortgage indemnity scheme and a cut in VAT to underpin the Green Deal.