The importance of perception
And in worse news for the infrastructure sector, it was the construction figures that dragged the rest of the economy into a double-dip, falling by 3% during the first three months of 2012, following a 0.2% contraction the previous year. The day after the ONS announcement, various media outlets rubbed salt into the wound by pointing out it was 19 years to the day since the UK pulled out of its last recession.
There have been plenty of people queuing up to disagree with these figures, though. Interestingly, research from financial consultancy Grant Thornton suggests construction companies’ order books are in fact up on 2010 and 2011, suggesting the sector is in a better position than it was 12 months ago.
Looking at the order books of 10 large UK listed construction companies, the firm found the total value at 5 April 2012 had increased by over £100m in the first three months of the year. Furthermore, there was a 2.3% increase in value between December 2010 and December 2011.
So for all the hand-wringing and concerns raised by the ONS figures, it may well be that the construction industry is in a stronger position than this time last year.
Unfortunately, this will have little bearing on the UK’s perception as a market for investment. Overseas investors are unlikely to see the quibbles in the background, but will no doubt be aware of the headlines surrounding Britain’s first double-dip recession since the 1970s.
What the announcement means is the government, public sector bodies and private contractors will have a harder time convincing investors from outside the UK that the country is a good place to be putting their money.
Whether the ONS figures will finally convince the government that it needs to start churning out new infrastructure projects remains to be seen.