From the TUC

If “we are the builders”, why is construction now in recession?

15 Jan 2016, by in Economics

It has not been a good start to 2016. While markets thrash around, the hard economic news so far for the UK has not been encouraging. Earlier in the week figures showed manufacturing in resumed decline, and likely having spent most of 2015 in recession. Today ONS figures suggest construction is now in recession.

There was a monthly decline of -0.5% into November; compared with a year ago, construction is down -1.1%, the lowest annual decline since May 2012.

Technically a recession is defined as two quarterly declines in a row, this effectively now holds over the most recent six months. There was a decline of -1.4% in the three months to November, following a decline also of -1.4% in the three months to August. Looking at the index numbers gives the clearest picture.

Index of construction


Construction declined over the first years of the coalition; there was a revival from 2012 but this reversed in early 2015. Construction has now fallen by 4 per cent since the peak in April 2015 (the month before the general election). Over 2011 to 2013 construction declined 16 per cent. Set in this context, it is early days, and we should stress that construction figures are volatile and there have been some difficulties with the ONS methodology. But at face value this is a recession, and we have to go back to the previous recession to see any comparable decline.

Looking beneath the headline figures, the data show recession driven by declines nearly across the board, in public and private housebuilding (though in both cases the declines may have been arrested in the latest months), infrastructure (public and private) spend, and repairs and maintenance, offset marginally by increased industrial and commercial construction (note that the scales are very different on each of these charts).

Index of construction components, £ million, 2012 prices


For clarity, growth rates and contributions are shown on the following table.

Construction: change between April to November 2015


growth,% contribution to total growth, percentage points
public housing -19.4 -0.8
private housing -3.3 -0.6
infrastructure -13.0 -1.8
other public -2.8 -0.2
private industrial and commercial 1.7 0.4
repairs and maintenance -2.5 -0.9
total -4.0 -4.0

The downturn in construction is therefore driven mainly by infrastructure, public and private housing, and repairs and maintenance. The infrastructure and public housing figures suggest rather heavily that a push from government has now fallen back. The more private-sector-orientated measures perhaps betray worries about the future.

In his spending review speech, the Chancellor boasted:

“For we are the builders.”

Given this ongoing deterioration in these official construction figures it is hardly surprising that the government announced new housing measures this week. The housing crisis is intensifying; in spite of all the incentives and subsidies, by the end of the last parliament house-building was in decline.

The need is not for more announcements and initiatives, but for spending. It has been repeatedly observed that now is a good time to borrow. With the economy getting weaker, the imperative gets even stronger. The rhetoric needs to become a reality. 

2 Responses to If “we are the builders”, why is construction now in recession?

  1. bobby
    Feb 16th 2016, 1:51 pm

    I can feel it
    2015 was slow
    2016 is non existant so far

  2. Stuart
    Mar 9th 2016, 12:20 pm

    Not many domestic builds so far this year,We are steel fabricators and did 3/4 house extension steels a week last year, were lucky to do 1 a week now ?