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Future 'bleak' as public sector output plummetsAugust 2012

Construction output in 2012 has fallen dramatically compared with the previous year.

Figures released in July by the Office for National Statistics (ONS) show big falls in all sectors of construction. Public sector housing output in May was 23 per cent lower than a year earlier, while the three months to May was also 23 per cent lower than the previous year.

Public non-housing output, which primarily covers education and health construction, was 20 per cent lower in May 2012 than the year before. In the three months to May it was 22 per cent lower than a year earlier.

Commenting on the figures, Noble Francis, economics director at the Construction Products Association (CPA), said: "Although the coalition has consistently made pronouncements of boosting UK construction and the economy, there is little sign of this in reality."

Private commercial, the largest construction sector, continues to buck the trend. Commercial output in May was 2 per cent higher than a year ago, while in the first five months of the year it was 1.3 per cent up on 2011. The CPA believes that this is not enough to offset cuts in public sector expenditure. "Overall, in the first five months of the year construction output was 5.4 per cent lower than a year earlier," said Francis, "so prospects for the year as a whole are bleak."

The CPA has called on Government to focus on getting a replacement for PFI sorted out immediately.

"There should be a focus on getting work on the ground now, and focusing on repair and maintenance," says the CPA. "[Government should] ensure that the Green Deal becomes a success by giving householders greater incentives to invest in energy-saving improvements."

Economics watchdog Experian has cut its growth forecast from this year from -4.4 per cent to -5.6 per cent. Experian's view for 2013 looks equally gloomy, forecasting a -2.3 per cent decline compared with an earlier projection of 1.3 per cent growth.

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