Public sector investment key to construction growth

"HIGHER government investment in the built environment will be central to sustained growth in construction activity during 2001 and 2002, according to forecasts published last month by the Construction Products Association.

The base forecast for the next two years anticipates that:
-the release of government funds under the Comprehensive Spending Review will
sustain growth over the forecast period
-private sector activity will level off as UK economic growth slows
-repair and maintenance work will outpace the growth in new construction activity
-new house construction will remain constrained as much by protracted planning delays as weaker demand
-overall construction output is forecast to grow by 2% this year and 3% in 2002.

However, the CPA warns that excessive delays in delivering government investment plans and a sharper than anticipated cooling in the UK economy would significantly cut construction growth and possibly even halve overall construction growth in the next two years.

Commenting on the forecasts, Construction Products Association president Roy Harrison said: 'The anticipated rise in public investment is long overdue. For decades the UK has invested a smaller proportion of GDP in the built environment than other European countries and the adverse effect of this on the competitiveness of UK business and our quality of life has become only too apparent.

'This additional funding will start to address past under-investment in important areas including the transport infrastructure, social housing, hospitals and school buildings.

'The additional government investment will underpin a modest acceleration in construction output over the next two years, coinciding as it does with an anticipated levelling off in private sector activity. However, the Government needs to develop and initiate specific proposals as soon as possible both to ensure that current planning and process obstacles are removed and that projects can be implemented within the time frame set in the CSR.'

In addition to the base forecast, the full report includes two alternative scenarios for the industry built around: 1. continued above-trend GDP growth; and 2. a sharper cooling in UK economic growth and significant delays in implementing announced rises in government investment.