The rapid deterioration in confidence in the construction industry is amply illustrated by the latest prognostication of the Construction Products Association forecasters.

The industry trade body has massively downgraded its expectations for construction output over the next six years, despite pepping up the figures for projected spending by the public sector. It now sees construction workload collapsing faster than at any time since the 1980s.

Its forecasters now think the recession will be longer and about twice as deep as they expected just three months ago.

The radical change of heart and deepening gloom reflects the speed of collapse in the overall economy.

With a forecast drop of more than 12% from peak to trough, this would put the downturn ahead roughly on a par with the very painful recession of the early 1990s, although the upturn is expected to arrive earlier.

That recession saw construction shed 600,000 jobs – more than one in four. Given the level of employment is about the same now as then, we might reasonably expect much the same again.

On the basis of this forecast contractors can expect to see industry workload shrink by more than £15 billion (in today’s money) up to 2011. After that all the signs are that recovery will be sluggish.

The association expects that even by 2013 the industry will only have bounced back to levels of output seen in 2003 and will be 8% below that achieved last year.

The detail of the revisions is interesting. Firstly the forecasters have assumed that the concertinaing of Government spending will lift public sector output this year. I will just note here that I personally remain sceptical about how fast the money will flow into work on the ground given the focus on already “accelerated” industry sub sectors.

But even accepting the prospect of the Government pumping up the volume of work, the forecast puts the drop in overall output in 2009 at 8.5% against the 4.6% forecast made last autumn. This suggests a huge shift in sentiment about prospects in the private sector.

In fairness part of the adjustment is down to the unexpectedly high figures recorded for construction output in the first three quarters of 2008. Here I’ll repeat that I am unconvinced by the official figures for 2008, but forecasters are obliged to take them at face value.

Anyway the end result is that it means the drop in 2009 is from a higher level than previously expected. Even so, the forecast expects to see £1 billion less construction work this year than they expected just three months ago.

One of the most unsettling revisions is that to private housing. The forecasters have abandoned even the hope of a deep recession in the private house building sector. They now expect carnage with output dropping by a further third this year after the extremely painful 20% drop this year.

Their view is that housing completions across Great Britain will drop to about 113,000 of which 80,000 will be in the private sector. And even by 2013 annual completions in Great Britain will be below 180,000.

This rather suggests that the Government aim of hitting a completions target of around 240,000 in England alone by 2016 is now so far in the realms of fantasy it is about as likely as Peter Pan and Cinderella having a love child adopted by the seven dwarfs.

But there is more. Yet another disturbing prediction is that the commercial sector is set for a much bigger bashing than previously expected, with output shrinking by more than a third over the years to 2012. Much of this will be down to a halving of work in the offices sector.

Output from new build retail schemes will also take a hammering, according to the forecasters – down 19% this year and a further 15% in 2010, with no recovery expected until 2012.

For my money this may prove a bit optimistic, given the shakeout of firms operating on the high street. The upside is that there may be a compensatory shift towards fitout, as companies take over vacant space in place of committing to new build. But let’s face it I could be wildly wrong here given that the pace of change makes it hard for anything other than a broad assumption on the scale of the decline.

Feeling a little downhearted and a little angry? Me too, particularly as I do feel that the Government could do more to spare the industry pain and help boost the economy with little risk to the long term state of public finances.

It could spend £20 billion over the next two years to build homes that are then rented and eventually sold into the private sector.
OK this smacks of a quasi part nationalisation of the house building industry, but if you can temporarily bring a huge swathe of the banking system into national ownership to preserve the industry as a whole I don’t see any philosphical hurdles.

It is worth reflecting on the fact that it easier for new companies within an industry to re-emerge from the collapse others than it is for industries themselves to re-emerge from collapse.

If the Construction Products Association’s forecast is in anyway a reasonable prediction of we are about to witness, we should expect the UK house building capacity to be severely crippled.

That would be an interesting legacy for Prime Minister Gordon Brown, who put house building at the very top of his agenda when he took the reins from Tony Blair.

The Government’s emphasis should be centred on preserving the fabric of essential industries rather than bailing out existing companies. Here Government could do much more for house building.

Government financing the building of 200,000 “ultimately” private homes over two years would save, I estimate, about 150,000 jobs in the sector. Each family of those 150,000 would then be able to spend and pay taxes and would be claiming fewer benefits. And when the market does finally pick up we will be scrabbling for fewer skilled workers.

And, while I am flirting with rant, I should throw in that the Government should also spend lavishly on domestic energy efficiency. How hollow will those pious words spouted so freely in recent year seem if this opportunity of exploiting redundant capacity is not snatched.

Apologies for sounding like a scratched record, more apologies if I am unintentionally coming across a little rabid. But I intend to keep pumping out this view until someone convinces me that I am talking rubbish.

I certainly will entertain that possibility, as I fear I must be talking rubbish or the Government would be directly financing the construction of at least 200,000 new homes earmarked for future sale over the next two years above and beyond the existing affordable housing programme-surely?