Construction sector key for economic growth

In a positive sign for the country’s economy, the UK’s construction sector has showed signs of growth in recent months, reports Richard Carr.

Developments on the rise

Following two months of decline, construction output across the UK rose by 3.9% in March, whilst private sector house-building also rose, figures from the Office for National statistics revealed.

Richard Carr Construction image

Can the construction industry drive economic growth

Despite this, the total UK construction output for the first quarter decreased by just over 1%, however this wasn’t as bad as initially predicted.

The rise in March provided a timely boost for the industry, but the sector still remains smaller than at its pre-recession peak back in 2008.

Survey evidence stronger than data

Howard Archer of IHS Global Insight believes the construction industry is doing better than the data currently suggests: “It needs to be borne in mind that the Office for National Statistics has flagged its concern over the current quality of the construction output data due to worries over how costs and prices are calculated. It also needs to be borne in mind that the construction data can be volatile from month to month and subject to significant revisions.

“Survey evidence on construction activity has consistently portrayed a healthier picture than the hard data in recent months, although the purchasing managers did report a significant loss of momentum in April which was seemingly influenced appreciably by increased uncertainty ahead of the general election.”

Construction slowing economic growth

The Bank of England believes the county’s construction industry has the potential to heavily improve the economic outlook, citing that the sector’s current weak performance is one of the reasons why it has downgraded Britain’s overall growth prospects.

Meanwhile, the Royal Institution of Chartered Surveyors called the lack of affordable housing a ‘national emergency’ and said that the government’s new measures to help home-buyers weren’t seeing enough new homes being built.

Development Specialist Richard Carr has recently spearheaded a project for his employer Fortitudo Property, which will see £300,000 paid in social housing payments to Poole Borough Council and £1m in Community Infrastructure Levy.

Skilled Workers

Richard Carr believes that although the recent data from March shows small signs of growth in the construction industry, the sector will struggle to perform to its potential until it fills its skills gap.

The lack of skilled labourers is seriously afflicting the industry and preventing it from growing further. He feels that more workers would mean more growth and a better economy outlook.

Also, he believes that there needs to be a complete moratorium on all direct taxations such as S106, CIL for an 18 month period and a “Presumption to Grant”, which would stimulate marginal sites and get a head of steam on sites that need developing!