Emergency Budget must look beyond short-term fix

THE Construction Products Association has written to the Chancellor ahead of next week’s  Emergency Budget statement, urging him to focus future public spending where it will deliver the most cost-effective solutions and support sustained economic growth in the longer term.

Although the wider UK economy recently returned to growth, the construction and construction product manufacturing industries have continued to experience very difficult conditions and output is expected to fall further in 2010 following last year’s largest fall in output since 1974.

Given that construction and product manufacturing are worth £110 billion each year and account for 9% to GDP, the Construction Products Association says these sectors will have an important part in ensuring long-term economic recovery in the UK. The Association has, therefore, highlighted key priorities for the Budget, which, it says, will be essential in helping a faster and stronger recovery.

The Association proposes that the Budget should: prioritize public investment in areas that provide benefits to the whole economy; ensure the UK is a competitive place to carry out a diverse range of businesses; and accelerate progress towards making the UK a low-carbon economy.

Michael Ankers, chief executive of the Construction Products Association, said: ‘We recognize the need to reduce public borrowing and welcome the urgency with which the Government intends to do this. However, the Government must ensure that future public spending is focused on delivering economic growth through the provision of essential energy and transport infrastructure, education facilities and housing.

‘Where money is spent it needs to deliver the most cost-effective solutions, as appropriate capital investment not only stimulates economic recovery in the short term, but provides a beneficial legacy in the longer term, by increasing productivity.

A recent report by the independent economic consultants, LEK Consulting, highlighted that for every £1 spent on construction output, £2.84 is generated for the economy and a further £0.50 is generated for the Treasury.

Mr Ankers continued: ‘This is clearly a critical time for the UK economy and the government is faced with very difficult decisions as to how it can sustain the economic recovery in the short term, while demonstrating it is intent on redressing the public sector deficit as quickly as possible.

‘The construction industry has an important role to play in this. In the short term, we can help speed up the economic recovery while at the same time playing an important role in providing the basis for long-term economic prosperity and helping to ensure that government targets are met.’