Building growth to level off, say industry reports

construction growth in Britain will decline this year as a result of the global slowdown, according to three industry reports.

The studies confirm that the industry will not escape the effects of the worsening global economic climate. But they do offer hope, because output is expected to rise again next year and in 2004 – mainly because of government spending.

Euroconstruct's report says UK growth will fall from 3.4% last year to 2.4% this year. The research group believes UK output will then grow at 2.8% in 2003 and 2.5% in 2004.

A report by Construction Forecasting and Research estimates that total output growth will fall to 2.3% this year, from 3.7% last year, and will remain at a similar level in 2003. CFR managing director Alan Armitage said: "The prospects for the industry remain robust despite the more fragile economic outlook."

The Consumer Products Association believes private construction output growth will fall from 2.3% in 2001 to 1.8% this year before rising to 3.5% next year and 3.8% in 2004.

According to Euroconstruct, the UK will fare much better than a number of other European countries where construction is expected to remain in the doldrums (see table).

It predicts that overall European output will stabilise this year after strong growth throughout the late 1990s.

Euroconstruct reports that output growth in western Europe will lag behind the overall economy's growth throughout the three-year period.

The prospects for the industry remain robust despite the more fragile outlook

Alan Armitage, director, CFR

The report predicts that construction growth in eastern Europe will be lower than that of the economy as a whole this year before forging ahead in 2003 and 2004.

The CPA report claims that the strong performance of the British construction industry reflects the government's plans to improve transport, health and education services through public–private partnerships and the PFI.

CPA chief executive Michael Ankers said industry's reliance on public sector work highlighted the need to ensure it went ahead.

He said: "If planning delays and other bureaucratic obstacles do not hold back the delivery of the government's promised investment, construction industry growth is forecast to exceed that of the general economy in 2003 and 2004."

Analysts are also confident that the government's spending plans keep the industry buoyant.

A RICS survey, also published this week, found that construction activity and profit expectations had tapered off throughout the UK.