With sixty thousand jobs lost, and a 9% fall in output, 2012 saw UK construction tip back deep into recession.

Over the past five years the construction industry has gone through one of its most difficult periods since the Second World War and the prospects are for 10 more years of pain.

The Construction Skills Network report – the industry\s annual skills forecast prepared by CITB-ConstructionSkills with input from employers across the UK, paints a stark picture of 2012:

• 20% downturn in public sector housing and non-housing construction

• 5% downturn in private housing construction

• 10% per cent downturn in commercial sector construction

• 15% downturn in infrastructure construction

And the prospects for the next 5 years (2013 – 17) are equally discouraging. Nearly every sector of the industry will continue to struggle with only the private housing, repair and maintenance and industrial sectors predicted to achieve anything like consistent growth. As a whole, the industry will only grow at an average of 0.8%, and will not match its 2007 output peak until 2022.

This weakness in performance is reflected in a predicted fall in construction employment every year from 2013-16, reaching a low of 2.36m – the lowest employment level in the industry since 2000.

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Recruitment to the industry is predicted to run at an average of 29,050 a year from now until 2017 – largely to fill vacancies arising from those leaving the sector. Across the UK only Greater London and the East of England can expect to see employment actively grow in this period.

Whilst Wales, Greater London and the North East are predicted to show the greatest increase in output during 2013-17, the North East is recovering from sharp declines in previous years, and much of the growth in Wales is linked to the Wylfa nuclear power build.

In contrast, the construction industry in the North West, the Midlands and Yorkshire and Humberside is expected to shrink still further.

Underemployment is an increasing concern with three regions (Northern Ireland, the North West and Yorkshire & Humberside) showing a gap of over 15% between falls in output and falls in employment over the last five years – suggesting an unsustainable level of capacity in the system.

Judy Lowe, Deputy Chairman of CITB-ConstructionSkills, said: "Construction found itself at the heart of a ‘perfect storm’ in 2012 – hit hard by a combination of public sector spending cuts and a lack of investment in the private sector. Client and consumer confidence is low and it is keeping growth levels down.

"Worryingly, the outlook doesn’t look much better – by 2017, construction output will still be 12% down on its 2007 peak, and employment 17% down on its peak in 2008. Indeed, we don’t anticipate the industry returning to its former levels until at least 2022 – meaning this will be one of the most difficult periods for construction on record.

"Construction is a vital engine of UK growth. While construction struggles for its survival, it’s impossible to see how the UK economy can generate significant growth.

"What's bad for construction is bad for the economy, so doing nothing is not an option. There is too much at stake. Construction remains the only industry that can kick start the economy in the short, medium and long term. We know that, for every £1 invested in construction, £2.84 is generated for the wider economy. There are currently over 150,000 unemployed construction workers. This potentially costs the economy £2.1bn a year in unemployment benefit and lost tax revenue. The actions we are proposing are straightforward, easy to implement and will deliver the results that re-establish construction as an essential element of economic growth."

(CD/GK)