Concern as construction sector output falls

By SCOTT REID
Published on 09/03/2013 00:00

BRITAIN’S battered construction sector faced fresh woes yesterday as it emerged that output had tumbled in the opening weeks of the year.

Official figures showed that output fell by 7.9 per cent year-on-year in January. Compared with the month before, output was down by 6.3 per cent, according to the Office for National Statistics (ONS).

A breakout provided by the Scottish Building Federation (SBF) revealed a 10 per cent decline in output north of the Border last year. It calculated the impact to the economy at £1.1 billion.

Despite accounting for well under 10 per cent of Britain’s economy, weak construction output was the main drag on growth last year, tipping the country back into recession.

There are fears that the UK could be heading for an unprecedented triple-dip recession if the downturn recorded in the closing months of 2012 continues into the new year.

Recent business surveys have pointed to weak construction and manufacturing activity in February, although a snapshot of the powerhouse services sector painted a brighter picture.

On Thursdsay, the Bank of England held back from injecting further stimulus into the economy, suggesting that policymakers may be waiting for more evidence to emerge.

Howard Archer, chief UK and European economist at forecasting group IHS Global Insight, said the weak ONS data fuelled concerns that the construction sector could, once again, be a “significant drag” on GDP.

“The construction sector will be fervently hoping that both the economy and the housing market see sustained improvement over the coming months, even if only limited, and that this stimulates building work.

“The sector will also be hoping desperately that the UK government comes up with more support and initiatives to lift activity in the March Budget.”

Michael Levack, executive director of the SBF, said: “If we’re going to begin turning the economy around this year, the Chancellor’s economic strategy cannot be for more of the same.”