Construction decline adds to economic woes

The UK economy has fallen by 0.2% in the final quarter of 2011 following growth of just 0.6% in the previous two quarters, according to GDP figures published today by the Office for National Statistics.

The main contributors to this fall were the manufacturing and construction sectors, which fell 0.9% and 0.5% respectively.

Commenting on these figures, Noble Francis, economics director at the Construction Products Association, said: "The GDP figures released today show that the final quarter of last year was extremely difficult for the economy, in which both construction and manufacturing had a significant effect. Unfortunately the prospects looking forward are even worse, as construction is expected to fall a further 5.2% during 2012, exacerbating the problems in an industry that has already lost 300,000 jobs, and severely hindering growth for the economy as a whole.

“Undoubtedly the problems in the euro zone have increased uncertainty in the private sector making investors highly risk averse to investment. However, this does not tell the whole story as capital investment from the public sector, which accounts for more than one-third of total construction activity, will have fallen 30% by the end of 2013. As construction has been highlighted by government as essential for recovery, the decline is severely harming prospects for the sector as well as constraining overall economic growth.”