Construction ‘has room for growth’

Ben Broadbent, a member of the Bank of England's Monetary Policy Committee
Ben Broadbent, a member of the Bank of England's Monetary Policy Committee
Share this article
Have your say

One of Britain’s leading economists has said he expects to see an improvement in the key construction industry.

Ben Broadbent, a member of the Bank of England’s interest rate-setting Monetary Policy Committee (MPC), said the prospects for the industry looked “less unfavourable than they have for a while.”

He said the industry had been a victim of the global economic crashrather than witnessing a “boom before the bust” meaning there was still room for the sector to grow.

In a speech at Lancaster University’s Management School, he said stabilising public sector investment and the Funding for Lending Scheme (FLS), which provides cheap funding to banks if they keep lending, making more cash available to improve mortgage lending.

Mr Broadbent said: “The contraction in capital spending by the public sector is soon to come to an end. Thanks in part to the FLS, banks’ funding conditions have fallen significantly this year.

“This holds out the prospect of some easing in domestic credit supply.”

In an interview with the Evening Post, Mr Broadbent said the turbulence in global financial markets meant UK interest rates would remain “pretty flat for a pretty long time.”

The MPC will have to decide whether to keep rates at historic 0.5% lows and increase its quantitative easing programme, which has seen it pump £375bn into the economy in a bid to stimulate lending, when it meets again this week.

Mr Broadbent said: “I will say no more than to point at what is in financial markets, that is that is they are pretty flat for a pretty long time, as far as I can see.

“We look at the risk, particularly around Europe, and that is likely to be around for a while, so I cannot make a promise with anything but that is certainly the expectation.”

The MPC is expected to hold off from any further economy-boosting moves when they gather this week following better-than-expected growth figures.

The economy sprung back to life in the third quarter when gross domestic product (GDP) grew 1%, ending the longest double-dip recession since the 1950s.

City experts predicted growth of 0.6%.

Despite concerns that the underlying picture is bleak, economists expect the committee to keep interest rates at t0.5% and hold its quantitative easing stock.