Growth and jobs hit by fall in construction output

The UK economy would have grown three times faster over the last year if the Government had stopped the decline of the UK construction industry, according to analysis of official figures published by the TUC.

The analysis shows that had construction output remained the same over the past five quarters economic growth would have increased by 1.2% instead of just 0.4%.

The UK construction industry has shrunk, overall, by 10% since the Government came to power, the study reveals. Construction output is now at its lowest level since 1998.

The main reason for this fall has been recent cuts to publicly-funded construction projects, which account for a fifth of total construction output, says the TUC.

Since the election the government has slashed Treasury support for public construction works by over a quarter (27.3%). During this period public money for house building has been cut by a fifth (20%) and spending on school, hospital and transport building projects cut by over a third (37.8%).

The fall in public sector construction projects has not been made up by the private sector, the study shows. Private sector funded construction works have declined by 4.5% since the government took office.

The Government’s failure to support the construction industry has also resulted in huge job losses, says the TUC. The research highlights how construction employment has fallen by 70,000 over the last year and by 89,000 since the coalition took office.

In addition, wages for those workers who have managed to survive the cull have shrunk in real terms by over £3000 a year over the course of this parliament.

Unless the Government provides more public funding the construction industry will continue to be a drag on economic growth, says the TUC.

The TUC wants the Government to kick-start an ambitious programme of affordable house building and investment in infrastructure projects. The government’s refusal to borrow to invest, and instead wait for private money that isn’t arriving, is preventing projects getting off the ground, says the TUC.

Research carried out for the TUC by the National Institute for Economic and Social Research (NIESR) shows that a £30billion investment in infrastructure would boost growth immediately and increase economic output by 0.5% a year on a permanent basis. It would also pay for itself in the long run, if implemented in “crisis” times.

TUC General Secretary Frances O’Grady said: “The Government’s failure to support our construction industry has been terrible for jobs, growth and wages.

“This research shows what happens to the economy when you cut back on vital state funding and why we need urgent investment in new affordable housing and infrastructure projects.

“Without this stimulus the construction sector will continue to struggle and slow down our recovery.”

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