Growth in the construction industry is set to outstrip that of the wider UK economy in the next three years, according to the Construction Products Association’s annual forecast.

The association has forecast 2.7% growth in construction output this year, mainly driven by the commercial industry. It is forecasting further growth of 3% and 3.5% for 2008 and 2009 respectively.

The association said a cooling in the housing market is forecast, which will dampen new-build housing and limit the recovery of the home repair and maintenance sector.

Allan Wilén, the association’s economics director, said: “After two lean years, industry growth is expected to outpace that of the wider economy, even though growth in government-funded projects is likely to be more modest than that seen earlier in the decade due to the tight Comprehensive Spending Review expected later in the year.”

Last year, growth in construction output was 0.9%.