The recovery will be fragile, so are BSF cuts enough to destabilise it?

Given that it only accounts for between 2% and 3% of industry output, recent cuts to Building Schools for the Future (BSF) spending are unlikely to cause a double-dip recession in the industry; our analysis suggests that continuing work, which is secure but has yet to start, amounts to about £4.5bn.

However, considering that the average cost of what has been delivered so far is about £60m per school, the loss of £4.1bn of work (£60m multiplied by 735 schools) is far from inconsequential. Jobs will inevitably be lost within construction and local and central government and the intangible impact this has on consumer confidence could be significant.

With a further 3% decline in industry output in prospect this year and only a modest 1% growth forecast for 2011, the recovery will be fragile.

A further blow to consumer confidence could be enough to destabilise it. But considering the level of BSF work already under way, and the amount of work in the pipeline, the cuts are unlikely to have an impact on those figures this year or next.

Kelly Forrest is senior economist at the Construction Products Association