Jobs, Growth and Social inclusion

Sharp fall in construction GDP drags down UK economy

Sharp fall in construction GDP drags down UK economy
Construction fell by 5.2% in the second quarter of the year, according to new provisional Government GDP figures.

The sharp contraction in construction dragged the UK deeper into recession, prompting calls for an immediate shot in the arm for building.

The dismal performance compounds a 4.9% construction drop in the first quarter of 2012.
Overall, the UK economy experienced a 0.7% drop in GDP – the biggest fall in quarterly UK economic outlook since the first three months of 2009.

The third successive quarterly drop was much sharper than the 0.2% contraction many economists predicted.

The Office of National Statistics underlined that the figures were provisional and said it was not yet sure of the effect of the extra June bank holiday and the poor weather.

The latest results intensify pressure on the Government to deliver an immediate stimulus for building, rather than more long term strategic infrastructure projects targeted so far.

Mike Leonard, director of the Modern Masonry Alliance, said: “No Growth in Spain will cause another economic disaster. The fact our Government has left for the summer recess without putting anything in place to stimulate growth and jobs across the UK is a disgrace.

“We need to invest in 25000 public rented homes now and cut the VAT to 5% on home improvements for 12 months. Anything less and the launch of the Made in Britain exhibition in a museum could be strangely significant!”

Simon Rawlinson, Head of Strategic Research & Insight at EC Harris, said: ”Last week’s announcement by the Government that it will back funding in infrastructure was very welcome, but it will not have an immediate effect on GDP.

“Overall, I think the UK economy may have bottomed out over the past quarter, and should rebound during the rest of this year, however I fear that construction will continue to struggle.

“There is no sign of an increase in aggregate construction orders, so this sector is likely to decline further.”

Noble Francis, Construction Products Association Economics Director said: “As the construction sector is such a key part of the economy, until we see recovery in construction, we will not have the economic growth the UK needs.”

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