The UK property industry has welcomed official data showing that the construction industry was the largest contributor to economic growth in the UK during the third quarter of 2010.
Data published by the Office of National Statistics showed the UK's Gross Domestic Product (GDP) grew by +0,8% in the third quarter, with the construction sector accounting for almost one-third (0,25%). The results mean the sector has posted quarter-on-quarter growth for the first time since 2007, and has recorded an increase of +11% between the third quarter of 2010 and the same period a year earlier.
Liz Peace, chief executive of the British Property Federation (BPF), said, "These are encouraging results and illustrate just how important a vibrant construction industry is to the overall UK economy.
"During the last two quarters, the construction industry has posted strong economic growth for the first time in three years. It is vital for the UK that it is allowed to maintain that momentum."
The BPF warned that the construction sector could be held back if ministers do not move quickly to introduce some form of Tax Increment Financing (TIF), which received backing in the Comprehensive Spending Review from the UK's Chancellor of the Exchequer, George Osborne.
TIF, a method of forwarding funding infrastructure - roads, public transport or community facilities - is seen as vital to unlocking new development, according to the BPF. It said that as a council could borrow the money to fund these projects it would allow wider development schemes to go ahead, and to collect the extra business rates generated by the development in order to pay back the loan over a set period of time.
Council-funded TIF would require legislation that may not be introduced until next year but, in the meantime, developer-funded TIFs, which would see the private sector take on all of the development risk, could be launched sooner with Treasury backing.
Liz Peace said: "At a time when few regeneration projects are viable, TIF offers one of the best prospects for providing the upfront funding of essential infrastructure that is needed to attract vital new investment from the private sector, and by doing so securing further growth in the construction industry as it continues to support the UK economy out of recession."