PUBLIC sector spending on construction is stabilising and private activity is growing, meaning the sector will at last start to recover early next year, a top policymaker said yesterday.
The Bank of England’s Ben Broadbent believes the industry has also begun to overcome its long productivity problems, again contributing to growth.
Official data show the sector’s output fell 11 per cent in the last year, now standing 18 per cent below its pre-crisis peak.
“One thing that does not account for the scale of the slump since 2008 is public-sector spending,” Broadbent said. “Public sector investment grew strongly during the recession itself and – in line with the plans formulated by the last government and matched by the current administration – has since fallen back.”
“Public sector investment is still slightly higher than it was on the eve of the crisis and it accounts for only a quarter of sectoral demand anyway.”
Rather, he said a boom in lending burst and hit private sector demand.
As state spending is stabilising at a level above that at the start of the crisis, he said growth is now returning.
And “in nominal terms, work on private-sector construction projects has grown by just over five per cent a year over the past couple of years,” he added.