黑洞社区

UK construction output will drop 2% in 2010 before making a shallow recovery over the next two years, according to the latest data from Experian.

The economic consultant鈥檚 Construction Forecasts report, released today, predicts that output will fall 1.9% this year, but rise 1.1% in 2011 and 2.4% in 2012.

The prediction is more optimistic than that produced by the Construction Products Association (CPA), which this week forecast a fall of 3.1% for 2010, followed by rises of 0.5% and 0.4% in 2011 and 2012.

Tony Williams, a construction analyst who helped compile the Experian forecast, and who runs consultancy firm 黑洞社区 Value, said the suggestion of a shallow recovery was not a good one for the industry.

He said: 鈥淔or me, 1 or 2% either side of zero is pretty much flat and that鈥檚 sickening. We鈥檙e going to have worked for a decade to be back to where we were at 2002 levels. It鈥檚 pretty depressing. If it weren鈥檛 for the Olympics and infrastructure, imagine the situation we鈥檇 be in.鈥�

Despite this assessment, Williams said there were encouraging flickers in the commercial market. 鈥淭he buying and selling of real estate is going pretty well now and rents in the City have just risen, which is a good sign. It鈥檚 just going to be a long wait.鈥�

The CPA forecast followed a 12% drop in construction output in 2009, the largest fall in a single year since records began in 1955.

If it weren鈥檛 for the Olympics and infrastructure, imagine the situation we鈥檇 be in

Tony Williams

It confirmed that office, retail and other commercial projects had suffered the most, with a massive 26% fall in 2009 and a further drop of 15% predicted this year. Michael Ankers, chief executive of the CPA, also warned that the industry could face disaster if the public spending it has relied on comes to an end.

鈥淟ooking ahead,鈥� he said, 鈥渢he pre-Budget report confirmed that there would be sharp cuts in government capital spending over the next three years, and if these occur before there is any significant recovery in private sector construction, then there is a real danger that what we currently anticipate as being a three-year downturn will extend even further.鈥�

Experian further warned that a lot of repair and maintenance work had been brought forward to 2009, in order to take advantage of the 15% VAT rate, which could leave the 2010 books looking sparse.

Meanwhile, Richard Kelly, construction partner at accountant BDO Stoy Hayward, warned that Revenue and Customs (HMRC) may lose patience with firms it had taken a 鈥渟oftly softly鈥� approach with last year, which could lead to more insolvencies.

He said: 鈥淭here were a number of corporate failures in 2009 but it was noticeable just how few there were compared with what was expected at the start of the year. A significant factor in this was the support provided to the sector by HMRC, with companies being given time to pay their tax bills; without this, many more would have gone out of business.鈥�

Kelly added: 鈥淕iven the pressure on government to increase the tax take, the tax man will not always want to play the role of the sugar daddy of the sector. At some stage, time to pay will really be time to pay.鈥�

One construction boss contacted by 黑洞社区 also spoke of a change in tone from his bank. He said: 鈥淚 was in a meeting yesterday and they were asking much more probing questions about our profitability. It鈥檚 clear the patience they showed last year as they sorted their own problems out is running out.鈥�