Construction sector to outperform UK economy as state expenditure on public services gets under way.
Two industry forecasts released this week have predicted robust growth in construction's workload over the next three years – but warned that this was dependent on the government's hitting its spending targets.

The reports, from Construction Forecasting and Research and the Construction Products Association, say construction will outperform the general economy over the next three years.

They also sounded a note of caution, however, saying that this growth would be largely the result of massive increases in public spending as the government strives to improve public services. The growth of private output is expected to slow in response to uncertainty in the global economy.

The CFR report, which is published today, said output increased 3.5% last year and is set to grow 3.8% this year, 3.2% in 2003 and 2.2% in 2004. It says government spending in health, education and transport will be the main drivers of this increase.

Infrastructure spending, which includes rail, road and utilities, is forecast to rise 8% this year and 10% in 2003 as the government's 10-year transport plan begins to take effect. Public construction projects, excluding residential, will grow 8% this year and 6% next year.

Infrastructure is forecast to rise 8% this year and 10% in 2003 as the 10-year transport plan kicks in

Construction Forecasting and Research

CFR managing director Alan Armitage said: "Construction in the UK is enjoying its best sustained period of growth since the late 1980s. Last year's concerns that the 11 September attacks would damage confidence were overstated."

The CPA says construction will outperform the rest of the economy for the next three years, the first time this has happened since the 1960s. It says output growth will average 3.5% a year until 2004, with public work growing 7.6% a year. The UK economy will grow 2.4% over the period.

But the CPA's figures show that the rise in public spending is masking the fall in private sector work. Private work output will increase 1.5% this year and next and 1% in 2004.