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INDUSTRYNEWS NO GOLD MEDALS FOR CONSTRUCTION SECTOR GROWTH


Last month’s gross domestic product (GDP) figures from the Office for National Statistics (ONS) show that the UK’s recession deepened further in the second quarter of 2012, led predominantly by further sharp falls in construction activity.


Overall, the UK economy shrank by 0.7%


between Q1 and Q2 but construction fell 5.2% over that same period, indicating that the construction sector is in a deep depression, despite a number of recent initiatives by Government to spur growth.


Commenting on these figures, Noble


Francis, Construction Products Association economics director said: “For construction the position is now very worrying, as


although we have known for some time that public sector activity would begin to decline, because of the Government’s deficit reduction plan, the hoped for recovery in the private sector has not materialised. 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.


“According to our latest Forecasts, construction is unlikely to return to growth until 2014. Government has acknowledged that construction will be a part of the solution for our economic woes, but if they are serious then they must act now to stimulate growth and drive recovery.”


Noble Francis MANUFACTURING AND CONSTRUCTION INSOLVENCIES TOP 9,000 MARK


Tere have been 9,113 insolvencies in construction and manufacturing since September of 2010, PwC figures reveal, despite the two sectors enjoying one of the best quarters in nearly two years.


In Q2 of 2012 (April to June) there were 15.5% fewer insolvencies in construction than the previous quarter, and nearly 8.36% fewer in manufacturing.


‘London suffered 120 construction insolvencies in Q2 and has lost 962 firms overall in the industry’


But where most regions enjoyed a relatively good quarter, London lost 66 manufacturing firms – the biggest rise in any UK region at 50%. London suffered 120 construction insolvencies in Q2 and has lost 962 firms overall in the industry since Q3 2010.


Most other regions again enjoyed a slightly better quarter, notably Yorkshire, the West and East regions. In the West Midlands there were 54 manufacturing insolvencies for Q2 this year, compared to 83 in Q1 of this year, about 35% fewer.


Overall, since Q3 2010, 3,586 manufacturing companies have gone under and of those, 1,027 have been industrial manufacturing companies, with the


remainder including aerospace and defence, automotive, chemicals, metals and parts of transport and logistics.


Of the 5,527 construction companies, circa 30% (1,635) were general construction and civil engineering firms, with the remainder made up of architectural, building, water projects, painting, roofing and plastering. Across all sectors there were 11% fewer insolvencies this quarter than the previous one, but under the ongoing cloud of economic and unemployment uncertainty, PwC experts say the slight reprieve in figures may not signal a long term improvement with the same pressures continuing through to 2013.


GOVERNMENT RE-THINK NEEDED ON BOOSTING DEMAND IN CONSTRUCTION INDUSTRY


It is time for the Government to think again about boosting demand in the construction industry, as weak demand is holding back economic recovery, says the Federation of Master Builders (FMB).


Te Federation’s call for a re-think came in


response to the news that the UK economy shrank again in the second quarter of 2012. Brian Berry, Chief Executive of the FMB said: “Once again, GDP figures are not a surprise to small and medium sized businesses in the construction industry and the remainder of this year is, without doubt, looking gloomy. Te latest industry forecasts


predict construction output to fall by nearly 6% before 2014. Among our own members 47% reported a fall in enquiries in the three months to June.


“On the one hand we know the


Government recognises the importance of construction to the economy. Officials know that every £1 invested in construction generates £2.84 in total economic activity. But on the other hand, the initiatives coming through from Government are not enough to offset the deep cuts in public spending.“Te private sector is not leading the economic recovery in the way the Government hoped.


32 « Clearview NMS « September 2012 « www.clearview-uk.com


We think it is time for the Government to think more openly about stimulating private sector demand, particularly for the industry’s hundreds of thousands of small businesses. Te Chancellor should cut VAT on all housing repair, maintenance and improvement work to 5%, which would provide a big stimulus to the UK economy and create over 100,000 new jobs by 2020. It would provide immediate help to private landlords or local authorities to bring more existing properties back into use, and provide a bit more certainty about demand for the Government’s flagship energy efficiency scheme the Green Deal.”


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