Leading economists have forecasted that the construction industry will enter a period of rapid and sustained growth over the next four years, enjoying an impressive 19% increase by 2017.
This estimation comes from the Construction Products Association, who expect the £20 billion expansion to be led by an increase in housing, energy and transport infrastructure. The new forecast comes following a notable rise in the housing industry over the summer, which has led economists to abandon their previous expectations.
Noble Francis, Economics Director of the CPA, said: "Construction is set to enjoy growth over the next four years as it recovers from its worst recession in over 35 years. This is mainly due to private housing, which is experiencing a rapid rise, and infrastructure, which is seeing a more gradual return to positive territory."
"The private housing sector is being driven by recovery in the wider economy and the impacts of policies including Help to Buy, which have driven both house prices and house building. This is expected to lead to private house starts increasing 19.0% in 2013 and 15.0% in 2014, albeit from historic low levels of house building.
"Although rapid growth is predicted over the next 18 months, uncertainty remains around what will happen when the policies end, given that the housing market is unlikely to be self-sustaining by then."
He explained that the infrastructure sector was still recovering from a difficult 2012, where output fell 12.7% despite the government announcing boosts to it.
"Government now appears, however, to be refocusing capital investment towards repairs and renewals. In addition, work on Europe’s largest construction project, Crossrail, is expected to peak over the next 18 months. As a result, growth of 7.4% is forecast in 2014.
"In the longer-term, the prospects for infrastructure will be reliant upon investment in the replacement of energy capacity across nuclear, offshore wind, gas and shale, all of which remain uncertain. Driven by this investment, we predict the sector will enjoy further growth of 27.9% between 2015 and 2017."
But despite this forecasted increase, other key sectors will apparently continue to struggle. Work in the largest sector of commercial (offices and retail) remains one-third lower than its high in 2007, while public sector construction, which accounts for one-third of total industry output, continues to constrain overall growth.
"After suffering from an extremely tough market for over five years, and acting as a drag on UK economic activity, construction is set to grow every year between 2014 and 2017. This should provide a considerable boost to the wider economy," said Francis.
Via Construction Enquirer
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