Few signs of upturn in construction industry: Worst slump since 1930s, say building employers

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The Independent Online
THE CONSTRUCTION industry is now in the grip of its longest recession since the depression of the 1930s, with few signs of an early upturn, building employers said yesterday.

Output will continue to fall for the next 12 months, delaying recovery until 1995, while the jobless total is likely to rise well beyond half a million, according to the latest state-of-trade inquiry by the Building Employers Confederation.

Commenting on the results, Sir Brian Hill, chairman of the BEC, said it was essential that the Chancellor, Kenneth Clarke, did not weaken the industry further by cutting capital spending programmes or raising the burden of taxation excessively in next month's Budget.

If Mr Clarke wanted to curb the budget deficit, it was important that he cut current expenditure and not the road programme and other construction projects.

The survey finds that one in five firms expect to shed more jobs in the next few months, two-thirds predict their workload will decline or at best remain flat in the year ahead, and the vast majority are still operating well below capacity.

'The construction recession is still continuing and it must be worrying that the majority of firms do not expect any improvement in output over the next 12 months,' Sir Brian said.

'This will postpone any sustained recovery until 1995.'

One of the few bright notes in the survey was that the balance of firms reporting an increase in inquiries for new work in the third quarter was back to pre-recession levels.

There has also been a continued hardening in tender prices in the past three months and a slight increase in the number of firms working at full capacity, but BEC officials stressed these improvements were from a very low base.

Although the housing market had shown some improvement, the market was a long way from sustained recovery and was being held back by uncertainty over tax changes in the Budget. If value- added tax were imposed on new house purchases, for instance, it would pose a serious threat to recovery.