I thought I’d flag up this article in the Telegraph from last week.
It’s about the construction industry hitting the buffers because of the poor weather in November and December this year.
It also notes that construction, despite being a very small part of the economy (6%) accounted for a significant proportion of what little growth there has been. Construction growth made up one third of all growth in the economy in Q2 of 2010, and one quarter of all growth in Q3. Not a bad contribution from a small sector.
This shows that the extra money invested in housing as part of the fiscal stimulus worked exactly as it was supposed to. The construction growth of the last year has kept people in jobs (and off benefits) and supported firms that otherwise would have gone under or contracted.
Think how much more anemic the growth in Quarters 2 and 3 would be without the extra housebuilding.
More worryingly for the future, construction is now contracting, jobs are being shed at a rapid rate and in particular “residential construction [is] falling at the fastest rate since April 2009, indicating the knock-on impact of a stagnant housing market.”
And I would add, deep cuts in capital for housing investment and the fiscal stimulus coming to an end.
And remember not only did this irresponsible, deficit creating spending splurge keep people off benefits, in jobs and supported competitiveness and capacity in the economy – it leaves a legacy of tens of thousands new affordable homes across the country that would not otherwise have been built.