There’s a widening gap left by public sector cuts

Last year proved to be better than anticipated for the construction industry, with publicly-financed work continuing to feed through and growth, albeit modest, in the majority of privately financed sectors. However, with finance still difficult and expensive to secure, there was a shift away from larger, high value contracts to smaller and medium sized projects. The CPA/Barbour ABI building (excluding infrastructure) index, including contract awards for projects worth up to £250m, reached 122, 12% higher than in December 2010.

The large contribution made by the public sector to contract awards in 2011 is a real concern - the full thrust of public sector cuts has yet to be felt. With forecasts for growth in 2012 being downgraded, the gap the measures announced in the 2010 spending review attempt to plug is getting larger. The private sector is proving reluctant to pick up the mantle from the public sector.

Kelly Forrest is a senior economist at the Construction Products Association