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[January 2003]
Slowdown Forecast for UK Construction Spending
Growth in UK construction output is expected to slow significantly in the next two years before picking up again in 2005, according to the latest forecasts from the Construction Products Association (CPA).
Output in 2002 is expected to have increased by over 7% - the largest annual increase since 1988 - driven by a significant increase in British Government spending on construction. A sharp decline in private sector investment over the next two years will reduce output growth to 3.7% in 2003 and just 0.6% in 2004, before it begins to pick up in 2005 when the industry is expected to grow by 1.3%.
The CPA's Chief Executive Michael Ankers said: "These forecasts suggest that public sector expenditure on construction will grow at nearly 5% per annum over the next 3 years at a time when private sector investment is declining. These forecasts should allay any fears that the industry will not have the capacity to deliver the Government's investment programme, and indeed demonstrate that this is a good time for the Government to invest in the much needed improvements to the infrastructure and built environment of this country.
"The forecasts pinpoint the fall in private sector investment to reductions in office and industrial building, a cut-back in retail expansion in the light of reduced consumer spending, and a cooling in private housing activity. There are some bright spots, however, with increases in private infrastructure where the new Terminal 5 at Heathrow will have a major impact over the period, and in the leisure sector where the rebuilding of Wembley will make an important contribution.
"Public sector investment in construction is expected to remain strong throughout the period as the Government's plans for increased spending on social housing, school buildings, hospitals and transport begin to gather pace."
ENDS