Recession fears rise for another quarter

Heavy rain and the Jubilee add to gloom in the building sector

BRITAIN could be set for a prolonged recession after building experts warned this weekend that heavy rain in April and May had hit growth in the sector. A further plunge in construction output will deepen economic gloom after revised growth figures last week showed that the sector fell by 4.8 per cent in the first quarter.

This was a key reason why overall output fell by 0.3 per cent, against an earlier forecast of minus 0.2 per cent, confirming that Britain is in a double-dip recession.

Wet weather, coupled with the layoffs caused by the long Diamond Jubilee Bank Holiday, mean that second-quarter construction figures are likely to be poor, according to Noble Francis, economics director for the forecasting group Construction Products Association.

This could condemn the country to another fall in output in the second quarter, adding to pressures on George Osborne to kick-start growth with a move towards ‘Plan B’.

The highly respected association said homeowners had been putting off repair and maintenance jobs amid the downpours of the past two months while road improvements had also came to a halt.

Francis said: ‘You can’t lay asphalt when it’s raining. You could do it if there was drizzle, but not given the amount of rain we had.’

Meanwhile, Britain’s beleaguered industrial heartlands will get a critical health check this week. The April survey of purchasing managers in the manufacturing industry, from the Chartered Institute of Purchasing & Supply, was hovering just above the level that would flash warning signs of a slump.

May results will come on Friday and there are fears that they will confirm that Britain’s short-lived manufacturing renaissance is over, strangled by a combination of a rising pound and collapsing demand in the eurozone.

‘The risks are on the downside,’ said George Buckley, economist with Deutsche Bank. ‘The pending election in Greece on June 17 adds to uncertainty regarding our major trading partner, the eurozone.’

Peter Dixon, strategist at Commerzbank, said: ‘A weak fourth quarter last year was followed by a revival in January and February, but the impetus seems to be fading. Perhaps that is not surprising, given the state of the global economy.’

Now problems on Britain’s building sites are adding to the gloom. Home improvement work, which amounts to as much as ten per cent of construction work every year, suffers in rain because householders put off jobs.