The chief executive of the Construction Industry Council has warned that the sector faces a “significant double dip” next year, despite the recent spike in output
Graham Watts was speaking this week after the release of official statistics for UK gross domestic product in the three months to September.
Construction grew 4% during the third quarter, pushing the preliminary estimate of UK GDP up 0.8%. This was twice the level forecast and up 2.8% on the year.
The spike in construction activity follows a 9.5% rise in the second quarter.
Watts said: “The figures are clearly not sustainable. The Comprehensive Spending Review (CSR) released £2bn more capital spending than we expected, but only half of that will benefit construction. In school building and affordable housing there have been huge cuts and private sector spending won’t replace those cuts.
“The industry faces a significant double dip in 2011-12.”
Stephen Ratcliffe, director of UKCG, also downplayed the rise in output. “All our survey evidence is that contractors expect to see falling output over the next couple of years, especially since public sector investment is set to fall 30% during the CSR period,” he said.
Simon Rubinsohn, chief economist at the RICS, said: “We are not entirely convinced. Housing starts remain way down on previous highs; meanwhile, the construction orders numbers have fallen away sharply.”
The government insisted the GDP figures indicated that private sector growth could offset the public spending cuts.
But Watts and Rubinsohn’s view was echoed in the City. Alan Clarke, an economist at BNP Paribas, said: “From a nation of bankers to a nation of builders? I’m not convinced.”