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[July 2003]
Private Sector Puts Brakes on Construction Growth
Private sector growth in the UK is forecast to fall sharply over the next three years according to the Construction Products Association's latest Construction Industry Forecasts, with output in 2003 forecast to grow by just 1.9%, dropping to 1% in 2004, with a slight rise in 2005 to 1.1%.
Commenting on the figures, Michael Ankers, the CPA's Chief Executive said: "Last year saw buoyant private sector activity which, combined with increased Government investment, generated an 8% increase, the largest annual increase since 1988. However, weaker private sector activity is now forecast to cut back overall industry growth over the next three years. A cooling in the general housing market and slower house price inflation is set to pull back private housing starts from 167,000 this year to 155,000 in 2005, and slow the growth in home improvement works.
"Private commercial output is also forecast to slow over the next two years. Falling uptake and increased availability in the key office markets, following retrenchment in the media and financial services sectors, has depressed the flow of new orders for office projects. As a result, office construction activity is forecast to turn down sharply as existing projects are completed, with some schemes awaiting tenants before proceeding to fit-out. Furthermore, weaker consumer spending growth is forecast to dampen retail and leisure construction activity, causing commercial activity to fall by 6.5% in 2003, and 4.0% in 2004.
"Our Forecasts show that the construction industry will be very much dependent upon the Government's investment plans for its growth over the next three years, with public sector growth (including PFI) forecast to increase by 6.3% this year, slowing to 5.7% in 2004 and 4.3% in 2005. However, Government has failed to meet its own targets over the last two years, and the recent decision to allow schools to use their capital funding to meet shortfalls in their revenue budgets has set a worrying precedent that has dented industry confidence in Government's commitment to deliver."
ENDS