Construction output is set to fall by 6.3 per cent this year and a further 1.4 per cent next, before a return to growth in 2014 according to the latest forecast from the Construction Products Association (CPA).
The decline will mean a reduction of almost £8.5 billion of construction activity over these two years, undermining the ability for construction to lead the UK's economic recovery, the CPA predicted.

However, the CPA also claimed that energy construction was set to double by 2016.

CPA economics director Noble Francis said: 'Construction is currently experiencing sharp falls, both for orders and output as a result of severe cuts in the government's capital spending, coupled with a very subdued private sector recovery. Construction has already lost £4.5 billion of work this year as the industry returned to recession for the third time in five years. Prospects for the industry going forward are bleak.

'Although growth is expected in 2014, the next 12-18 months are likely to cause considerable pain to an industry that is already reeling from a prolonged decline. Considering how important construction is to the economy as a whole, and how many times government has stated that construction is essential for recovery, these latest forecasts will do nothing to improve confidence in the UK economy.

'With the Autumn Statement less than two months away, it is imperative that government prioritises its spending by switching from current spending to capital investment for essential housing and infrastructure, as well as sorting out the long overdue model for drawing in private investment into construction. Otherwise, rather than driving economic growth in the near term, construction will keep the UK economy flat-lining as it has been for the past two years.'

Other key findings by the CPA include:

* Public sector construction work to fall 19 per cent between 2010 and 2014
* Private sector construction work to fall 4 per cent in 2012 but rise by 15 per cent between 2012 and 2016