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CPA highlights concerns over CSR

SALES of construction products continued to rise during the third quarter of 2010, compared with the same period of last year, according to the latest Construction Activity Barometer from Ernst and Young and the Construction Products Association (CPA).

Sales of both heavy- and light-side products were strong relative to the third quarter of 2009, with the heavy-side sales index standing at 79 for the second consecutive quarter and a significant 71% of respondents reporting that their sales rose.

However, the CPA says the buoyancy of the past six months is relative to the depressed state of the industry during 2009 when private sector demand contracted at an unprecedented rate, and it warns that the current cautious optimism is unsustainable in the longer term.

Noble Francis, economics director for the Construction Products Association, confirmed that expectations about the future were more subdued, particularly on the heavy side, with sales volumes anticipated to plateau in the fourth quarter and recovery unlikely to be sustained beyond 2010.

Amid growing concern that the anticipated reductions in government capital spending will be sufficient to tip the industry back into recession in 2011, the Association has written to the Chancellor ahead of next week’s Comprehensive Spending Review (CSR), urging him to focus future investment on those areas most likely to stimulate economic growth.

In he letter the Association argues that public sector net investment should not fall
below 2.25% of GDP – the level below which the quality of the country’s built assets
will start to deteriorate – and should be focused on transport infrastructure, education facilities and housing.

Michael Ankers, chief executive of the Association, said; ‘We strongly support the need to address the country’s huge budget deficit. However, spending cuts and tax rises alone will not secure the long-term sustainable economic growth, which must be the Government’s ultimate goal.

‘We accept that reductions in capital spending have to play their part in helping to reduce the deficit, but we believe that the proposed cuts in capital spending while current spending continues to grow, are not consistent with the Government’s stated aim of ensuring public spending is focused on where it will do most to stimulate a private sector-led economic recovery.’

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