Construction has experienced its biggest fall on record and experts predict the industry could go into deep depression if the government fails to deliver on its public spending commitments.

The Construction Products Association said despite some reports that construction was beginning to turn a corner, the industry entered 2009 with its sharpest fall in output since 1980 and new orders since 1983. Forecasts for the coming year indicate a 12% fall in output, followed by a 3.4% fall in 2010.

The association said positive growth was expected in publicly funded areas such as education, health and rail, however, with public borrowing reaching unsustainable levels, it was unlikely public sector construction would grow in the medium term.

“Without delivering its public spending commitments, government will miss its targets for housing, schools and hospitals. This could turn the construction recession into a deep depression,” a spokesperson said.

Noble Francis, the association’s economics director, said: “This is the most serious downturn most of us in the industry have ever experienced. Any upturn will be critically dependent upon an increase in credit availability in the private sector and government spending.”

The report said housing starts were expected to fall to 70,000 this year, the lowest since 1924, and commercial output would fall over the next two years by 53% in new office and 40% in new retail.