A cut in interest rates by the Bank of England at noon this Thursday is being pencilled in by most analysts and economists, the only real question appears to be how big the cut will be.

This may help the struggling construction industry – but not that much. The immediate issue for cash-desperate companies is not the rate of lending, but whether the banks will lend at all.

That is why I suggest that the only way to save construction from a deep recession now is for the Government to spend and spend big.

I am not alone in seeing the rapidly deteriorating state of an industry that was in its pomp little more than a year ago.

Here is a quote from the chief economist of the surveyors body RICS following the release of the latest CIPS figures: “Housebuilding and commercial development have virtually ground to a halt and even infrastructure projects appear to be feeling the pain.

“Public sector projects should provide some offset to this bleak picture with the government announcing in the Pre-Budget Report an acceleration in capital spending to the tune of £3 billion for the coming year.

“Even so, the value of construction output is likely to fall in 2009 with unemployment rising sharply in all trades. Following on from yesterday’s disastrous CIPS survey of the manufacturing sector, the pressure is for the MPC to cut interest rates further when it meets later this week.”

Yes an interest rate cut may have help to boost sentiment and may help to ease the liquidity problems that are putting the squeeze on businesses. But frankly while the banks frequently behave stupidly, they resent being made to look like mugs.

From where they stand now they would certainly feel like mugs if they leant more freely to construction firms, however strong the case is for judging each company on its own merits.

They sniff the wind of change in the industry, the shortage of orders. They know how rapidly construction can descend into a chaotic work grabbing frenzy of cut price contracts. They know its track record for business failure.

Even if they don’t know the detail, construction has a very poor reputation when it comes to performing in a recession.

The only thing that will ease the troubled minds of bankers is the smell of solid orders and a more buoyant industry.

The only sure way of delivering that will be an improvement in the outlook for the workloads of construction firms. And the only place that cash can come from is the Government.

For me there are two areas that the Government should look to spend and spend big.

One is building new homes. Two is a massive programme to reduce energy consumption in existing homes.

I have put the case for option one. It is an investment opportunity that the Government would be foolish to ignore.

The case for the second is even stronger. It is local work, it is vital and if you get a chance to see last night’s BBC Newsnight discussion on climate change, it rather emphasises the case for immediate action.

I accept that the Government is accelerating spending, but to put the figures into perspective the injection of £3 billion is in real terms significantly less than John Major pumped into construction when it last found itself on skid row.