Tony Blair invited comparisons with Fraser of Dad's Army when he delivered a doom-laden new year's message, dominated by Iraq, al-Qaeda and the faltering global economy. He might also have mentioned gun crime, rail chaos, and hikes in council tax and national insurance – the latter courtesy of, er, Tony Blair. But he is not alone. City analysts are also playing Cassandra (see financial news). Their fears are based on the fact that profits have been 10% below what they forecast for the period after summer 2002 – partly because of firms' exposure to the collapsing office market. Will lavish state spending and the PFI programme compensate? Not all the analysts are convinced, and – in the wake of last week's mothballing of Thameslink 2000 – with some reason.

Analysts have never had much faith in contractors, but they are particularly dispirited about those involved in support services, especially Amey. Chief executive Brian Staples is finally going, but after the company's value plummeted from £1bn to £77m in two years, it will take a managerial masterstroke to restore its credibility in the Square Mile. And what of Jarvis, and Atkins? Hmmm. Well, at least the Tube deal's getting signed.

Woe upon woe, then. But are there no gleams of light? The analysts have a point, but their melancholia may have something to do with predictions of 10,000 job losses among the City suits. And it's worth reflecting that 2002 was nowhere near as bad as many soothsayers predicted. The stock market continued to tumble, but that didn't do too much collateral damage to the wider economy. GDP grew 1.5%, the M&E sector grew 3%, and construction as a whole expanded by 7%, continuing its best economic performance since the 1980s.

With a Royal Navy taskforce leaving for the Gulf tomorrow, these are risky and unpredictable times. But even if, heaven forbid, there is war against Iraq, it won't necessarily send shares tumbling; and although oil prices will rise initially, they will fall once the conflict is over and Iraqi oil comes on stream. The US economy is still sluggish, but George Bush's £416bn tax cuts should stimulate growth, reinvigorate the global markets, and help shares in the UK to rise by, perhaps, 20% this year. One market watcher has pointed out that UK stocks tend to fare well in the year before a US election – something for construction's beleaguered bosses to cling to. In the wider economy, consumer spending will rise more slowly (but not necessarily fall), and house price inflation will drop from 25% to nearer 12% (but not necessarily crash). Even the most doleful analysts expect housebuilders' profits to hold up, buttressed as they are by the lowest interest rates since the 1950s. And mercifully, the surge in inflation to 2.8% last November looks like a blip.

Questions do remain about the PFI, and anyone over-exposed to office work needs another plan fast. But there's no reason why Construction Forecasting and Research's prediction of 5% growth this year and 3% next won't be met. Food retailers are spending like Oxford Street bargain-hunters, and Wembley and Terminal 5 – Britain's biggest building project – are under way. If anyone needs a further boost, turn to page 79. This week's Building has 39 pages of jobs – the most since January 2000. And that turned out to be a pretty good year for construction. Here's hoping.