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RELEASED: OCTOBER 2008
After researching the UK construction market development and taking into account various other factors the following conclusions can be drawn from MBD's report:
MARKET REVIEW 2004-2008:
Total construction output, including new work and repair & maintenance work, is expected to increase by a moderate 1% to £115.82 billion in 2008. This follows stronger increases in the previous four yours, with annual growth levels fluctuating between 5% and 12%. The slowdown during the current year is due to a projected decline in new work, largely as a result of the economic downturn, the slowdown in the housing market and the global financial crisis, leading to the cancellation and postponement of projects. Within, the new work sector, the strongest reduction in output is expected in the private housing sector, which is projected to contract by 12% in nominal terms during the year. Despite the decline in new work during 2008, the sector is expected to continue to account for the largest proportion of construction output, representing an estimated 54% in the current year.
MARKET FORECAST 2009-2012:
Total construction output in Great Britain is expected to decline by 5% in real terms in 2009 followed by a moderate 2% decline in 2010. This is largely a reflection of a strong downturn in construction activity anticipated in the private housing, commercial and industrial sectors. The global financial crisis and the economic downturn, which is now believed to be more prolonged than previously expected, will exert a downward pressure on the construction market in 2009 and 2010. Nonetheless, moderate growth is expected to be maintained in the public housing and public non-residential sectors, driven by continued government investment in construction programmes in the health, education, leisure and social housing sectors. However, despite the Government’s commitment to invest in public sector construction projects, there are some doubts concerning the future availability of funding due to the current strong increase in public borrowing. Repair & maintenance activity is expected to decline moderately in 2009 and 2010, reflecting the worsening economic outlook, although modest growth is expected to be restored by 2011.
MBD forecast total construction activity to return to growth in 2011, albeit at a moderate 2%. This is expected to be followed by slightly stronger growth of 3% and 4% in 2012 and 2013 respectively. In the public sector the development of the market is expected to be strongly influenced by the delivery of Government investment and the ability of local authorities to avoid the deferral of essential repair & maintenance work. The prospects in the private construction sector are closely linked to economic conditions, thus the anticipated return to growth in 2011 is strongly dependent on an economic recovery.
NOTE TO EDITORS:
MBD specialises in business to business market research. The range of reports and industries in which we operate in constantly expanding (our portfolio comprises of more that 140 titles). All our reports are written by in-house market consultants.
Click here for full details of the UK Construction Market Research Report
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