23 July 2012
The consensus among UK’s top construction forecasters is that things are worse than we thought.
A week ago we saw Experian and Leading Edge downgrade their forecasts for construction growth.
The graph presents unappetising fare for construction firms and indicates that we should start to see more jobs lost and more firms either cutting back or going bust.
It also illustrates just why construction leaders have stepped up their campaign to get Government to boost building.
There are always revisions as forecasts adjust to the flow of new data and as the official data against which they forecast is revised.
But the sharp deterioration in the economic health of the UK and the constant uncertainty generated by the ongoing Euro crisis are in large part what has prompted forecasters to cut their forecasts for construction growth this time.
Underlying this downgrade are growing fears over the prospects for the private sector.
The weakening economy and lack of resolution in the Euro zone have led the expert forecasters to doubt the ability of the private sector to pick up the slack as public spending cuts reduce demand in construction.
Advanced figures given to brickonomics by Hewes suggest a drop in construction this year of 7.8% followed by further falls of 4.3% in 2013 and 0.9% in 2014.
This is by far the most pessimistic of the forecasts, but Hewes has consistently forecast on the basis that the problems in Europe will spill over generating nasty effects for finance, banks and the general economy.
The Construction Products Association comes in as the most optimistic. It is expecting a fall of 4.5% this year and a further fall of 1.3% in 2013.
It expects the industry to recover in 2014, when there should be near normal growth.
But it must be remembered that the key risks to this forecast are on the downside and high among them is the uncertainty in the Euro zone.
Whichever of the suggested futures lies ahead for construction, it will be many years hence before the industry enjoys the output it enjoyed in 2007.