Infrastructure spending offers some comfort
FOLLOWING the sharpest fall in construction output on record, and with its latest forecasts not anticipating any recovery in the industry’s fortunes until 2011, the Construction Products Association says the one bright spot over the next few years will be government spending on infrastructure.
Despite some encouraging signs that the wider economy may be coming out of recession and that the housing market is beginning to recover, the Association has forecast that construction output will fall by 15% this year and a further 2% in 2010, before beginning a slow recovery from 2011.
‘There are signs that the private housing market is beginning to pick up although the recovery is expected to be slow and from historically very low levels,’ commented Michael Ankers, chief executive of the Construction Products Association. ‘However, even with this new optimism, the total number of houses expected to be built in 2009 and 2010 will only equal the number built in the year before the credit crunch.’
Mr Ankers added that government spending on construction projects in the short term remained strong and that without this the industry would be in a far worse position, but he warned that any significant cut-backs in capital spending after the Election would prolong the downturn, as the Association is not expecting to see any significant growth in private sector commercial projects for some time.
One bright spot for the industry, he said, is government spending on infrastructure. ‘We see this remaining strong throughout our five-year forecast period, with commitments to the rail network, a new five-year programme for investment in water and, towards the end of the period in particular, the start of major investments in new energy supply.’
Following the publication of the latest forecasts, Mr Ankers said the Association would be continuing its dialogue with the main political parties to ensure they recognize the construction industry is key to sustaining employment and bringing the economy out of recession.’
Key aspects of the Association’s forecasts include:
- The infrastructure sector is expected to grow significantly throughout the forecast period, reaching an estimated £10 billion in 2013.
- Private housing starts will grow steadily throughout the forecast period, reaching 148,000 in 2013.
- Public investment in schools and hospitals remains strong in 2009 and 2010, but is anticipated to fall sharply in the following years.
- Commercial new work is falling very sharply and by 2010 is expected to be less than half the size it was two years earlier.
- Construction of factories and warehouses is expected to fall almost 60% between 2007 and 2010.