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[January 2004]
Construction Growth in UK Set to Slow
Higher government spending will be crucial to sustained construction industry growth in the UK over the next three years as private sector generated work weakens, according the Construction Products Association's (CPA) latest Construction Industry Forecasts.
Commenting on the figures, CPA Chief Executive Michael Ankers said: "Although private sector growth is forecast to constrain construction activity over the next three years, government spending continues to keep the industry optimistic, with public sector output forecast to grow by 7.5% in 2004, 3.1% in 2005 and 2.5% in 2006.
"In contrast, higher interest rates and a moderation in household spending growth are forecast to curb related construction sectors such as housing, retail and leisure premises. Additionally, oversupply in the office market will continue to depress the flow of new office developments over the next two years, while near term industrial building work will remain at a low ebb despite the recent strengthening in the euro and an anticipated recovery in world trade.
"Overall, the construction industry is expected to avoid recession thanks to higher Government investment in the built environment. However, statistical rules will artificially depress the official figures as rail maintenance contracts are brought in house by Network Rail and are excluded from the construction output statistics. This will trim 1% for total construction output this year and next. As a result, overall construction industry growth is set to slow to 1.5% this year, with output dropping 0.7% next year before growth resumes in 2006."
ENDS