CPA forecasts UK slowdown

Growth in UK construction output is expected to fall to just over +1% for 2008, down from the +2,6% growth seen in 2007 according to the latest forecasts from the UK Construction Products Association (CPA). The CPA says this low-level of annual growth is expected to remain until 2012.

CPA chief executive, Michael Ankers said, “The economic backdrop against which these forecasts have been prepared is more uncertain than for many years The fall in private housing – both new build and repair and maintenance – over the next couple of years, (will be) balanced by continued growth in the commercial sector.

“The industry will also be supported by increasing government investment in its schools programme, a modest recovery in spending on infrastructure projects and the start of the major projects associated with the Olympic Games.

“There are undoubtedly risks associated with these forecasts and we are assuming that the Bank of England will continue to lower interest rates throughout 2008. Failure to do so will undoubtedly delay any recovery in the housing market.

“The forecasts also rely on government remaining committed to its investment plans for education and health and whilst significant reductions in these programmes seem unlikely in the run up to the next election, what happens after that will to some extent depend on the strength of the government's finances.”

In the residential market, the CPA expects housing starts to fall to 205000 in 2008 before recovering gradually to 235000 by 2012.

In contrast, construction spending on non-residential commercial projects is expected to peak in 2009 at UK£ 17.3 billion (€ 23.1 billion), while spending on infrastructure is expected to creep up from the low of UK£ 5 billion (€ 6.7 billion) in 2007 to UK£ 6.5 billion (€ 8.7 billion) in 2012.