Analysts this week feared that in order to boost the UK economy the government will fall back on construction and financial service projects, according to Clear Property Investment.

The construction sector has already been hailed as one of the main players in boosting the UK's national income. This has come in the form of commercial property and infrastructure which has leapt four per cent compared to house building in the months July, August and September.

However, this seems to contrast with massive public spending cuts.

Kelly Forrest, a construction economist at the Construction Products Association, told the Observer newspaper that the commercial market's strength was probably the biggest surprise. "The private sector has bounced back quite strongly but from a low base. There has been some recovery, but there are question marks as to whether it can be sustained."

Rents for commercial property have already begun to rise in London. Large-scale developments such as the Pinnacle Tower, and other developments in Canary Wharf are already going full-steam ahead.

Housebuilders have also been instrumental in this growth with speculation that top players were set to hire up to 10,000 individuals in the industry. Public housing and schools have also boosted this number.

Local Authorities now have more power when it comes to house building. Many are talking of boosting public sector housing numbers but so far not many have come to pass thanks to tough planning regulations.

The commercial sector (offices, industry, retail) contributes 25 per cent to construction activity but this has fallen in recent months. Analysts hope it will become more buoyant in a bid to offset low public sector spending.

Chris Williamson, chief economist at Markit, said: "With construction still the main driver of the stronger-than-expected GDP figure, and a deteriorating outlook for that sector and lower public spending, there is still a chance that the economy may need a further shot of stimulus in the near future."

John Philpott of the Chartered Institute of Personnel and Development said: "If Chancellor of the Exchequer George Osborne really wants to avoid a double-dip recession he should abandon the 'carry on regardless' school of fiscal policy and take a much more cautious approach to cutting the deficit."

For further information and up-to-date news on investing in property and house building in the current economic climate, contact any of our Clear Property Investment team.

 

 

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