CPA lifts construction growth outlook, UK

CPA lifts construction growth outlook, UK
Published: 23 October 2013

The Construction Products Association is anticipating growth of 19 per cent for the UK construction industry by 2017 – an upward revision from its summer forecast, reflecting an increase in activity, which will boost UK GDP by an additional GBP20bn.

Noble Francis, Economics Director of the Construction Products Association, commented: “Construction is set to enjoy growth over the next four years as it recovers from its worst recession in over 35 years. This is mainly due to private housing, which is experiencing a rapid rise, and infrastructure, which is seeing a more gradual return to positive territory.

“The private housing sector is being driven by recovery in the wider economy and the impacts of policies including Help to Buy, which have driven both house prices and house building.  This is expected to lead to private house starts increasing 19.0 per cent in 2013 and 15.0 per cent in 2014, albeit from historic low levels of house building.

“Although rapid growth is predicted over the next 18 months, uncertainty remains around what will happen when the policies end, given that the housing market is unlikely to be self-sustaining by then. 

“The infrastructure sector is recovering from a very difficult 2012, when output fell 12.7 per cent despite numerous government announcements of ‘boosts’ to the sector.  Government now appears, however, to be refocusing capital investment towards repairs and renewals.  In addition, work on Europe’s largest construction project, Crossrail, is expected to peak over the next 18 months.  As a result, growth of 7.4 per cent is forecast in 2014.

“In the longer-term, the prospects for infrastructure will be reliant upon investment in the replacement of energy capacity across nuclear, offshore wind, gas and shale, all of which remain uncertain.  Driven by this investment, we predict the sector will enjoy further growth of 27.9 per cent between 2015 and 2017.

“Two other sectors figure prominently in our forecasts,” Mr. Francis continued.  “First, work in the largest sector of commercial (offices and retail) remains one-third lower than its high in 2007.  Second, public sector construction, which accounts for one-third of total industry output, continues to constrain overall growth.”

He concluded:  “After suffering from an extremely tough market for over five years, and acting as a drag on UK economic activity, construction is set to grow every year between 2014 and 2017.  This should provide a considerable boost to the wider economy.”

Key points in the Forecasts include:
• Construction output growth of 2.7 per cent in 2014 and 4.6 per cent in 2015
• Private housing starts to rise 19.0 per cent in 2013 and 15.0 per cent in 2014
• Public education to fall 14.0 per cent this year
• Rail infrastructure to rise 34.0 per cent by 2017
• Energy infrastructure to rise 99.0 per cent by 2017
• Public sector education and health projects to fall 11.0 per cent in 2013 and 2.4 per cent in 2014.