So much for avoiding double dip recession as predicted at the budget. For those who missed it, the UK entered double dip recession according to the latest Quarter 1 statistics for GDP published by the ONS at the end of April. A major contributor was construction which fell by 3% in the first quarter, following a fall of 0.2% in the last quarter of 2011. Final figures have now been released which show an even worse situation, with a 4.8% fall in the first quarter of 2012. At the same time, RICS reported that their Construction Market Survey reported a modest increase in workloads in the first quarter of 2012. They also reported optimism for this year with 21% more respondents expecting workloads to rise over the coming 12 months.

We can only hope that this sharp decline reported by ONS will raise the importance of construction on the government’s agenda. Although various initiatives have been announced these are mainly capital projects which will take a year or two to plan and implement. Various industry groups are thus lobbying for short term action. In general terms expectations for the industry are that activity will be much the same as last year, although the mix might be different. Private housebuilding and infrastructure projects will increase, while public sector activity will fall. The commercial sector is dependent on investor confidence, so we will have to await the latest changes in Europe and the impact that has on investor confidence.

An opportunity which will impact fairly quickly is the governments £2 billion Priority Schools Building Programme, which is now 6 months overdue. Once released this should see some work come through quite quickly. Another government initiative which seems to be floundering is the Green Deal which now seems unlikely to have an impact until 2013 at the earliest.

Looking further ahead, the government  construction pipeline was updated at the end of April to show a further £4 billion of  work by 2016. But this increase is not due to new expenditure, but as a result  of more projects being included.

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