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Construction output is set to fall by more than two per cent this year following an eight per cent contraction in 2012, according to forecasts published by the Construction Products Association (CPA). A recovery is anticipated in the medium-term with growth of 1.9 per cent in 2014 and 3.8 per cent in 2015.

Noble Francis, CPA’s economics director, commented: “The industry lost £9billion of activity last year and these latest forecasts anticipate a further £2 billionloss in 2013. This fall is primarily due to the lack of private sector investment andthe continuing bite of public sector spending cuts. Conditions were exacerbated by poor weather during the first quarter.

“Of most concern is the fall in output in private commercial, the largest construction sector, which fell 10 per cent last year and is estimated to fall a further seven per cent in 2013.

“Despite this, we are already encouraged by signs of improved market activity, primarily driven by private housing and infrastructure. We anticipate that government policies such as Help to Buy will boost private housing, which is expected to rise 19 per cent in just two years. Infrastructure activity is set for seven per cent growth in 2013, boosted primarily by rail construction such as Crossrail, Europe’s largest project, and station refurbishments around the country.

“Overall, 2013 is anticipated to be extremely challenging. From 2014 prospects are brighter for the industry, but the key risk is the extent to which government announcements feed through to activity on the ground.”