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construction industry forecasts 2011-2015

construction industry forecasts 2011-2015. Dr F. Noble Francis economics director. current & near-term economic situation. the new economic reality – forecasting the future. Economic Growth?. GDP + 0.5%. Manufacturing - 0.3% 3 rd consecutive fall. Largest fall in RHDI since 1977.

alexandre-deangelo
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construction industry forecasts 2011-2015

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  1. construction industry forecasts 2011-2015 Dr F. Noble Francis economics director

  2. current & near-term economic situation

  3. the new economic reality – forecasting the future Economic Growth? • GDP + 0.5% • Manufacturing - 0.3% 3rd consecutive fall • Largest fall in RHDI since 1977

  4. the new economic reality – forecasting the future Prices and Rates • Inflation – above 5% in September • Increase in QE* * Revised in October • Interest rates to stay low near term

  5. Key Risks • Government debt default from Greece/Portugal • China economic slowdown affecting global economy

  6. Looking forward in the construction industry

  7. construction industry forecasts2011-2015 Private Housing • Government attempting to boost housing supply • Housing Strategy? • Key issue still Affordability • Don’t believe the hype – planning and localism 186,000 Starts (2007) 137,500 Starts (2015) 73,000 Starts (2009)

  8. construction industry forecasts2011-2015 Public Housing 30,000 Starts (2010) • Up to 170,000 affordable homes in four years but... • ...only half social housing • DCLG capital expenditure £6.4bn in 2010/11 to £1.8bn in 2013/14 26,500 Starts (2011) 19,100 Starts (2013)

  9. construction industry forecasts2011-2015 Total Housing • Overall, 121,500 this year... • 663,000 over 5 years • 267,000 new households p.a. • 1.3m households in 5 years Additional Housing Gap (2011-15) 671,000

  10. Education inc. PFI • Capital expenditure: £7.3bn in 2010/11 £3.3bn in 2013/14 • Focus - finishing BSF and Academies plus basic maintenance

  11. Health inc. PFI • Capital Expenditure: £4.5bn in 2010/11 £4.4bn in 2013/14 • However: • Focus - essential repairs • Shift towards I.T. spending

  12. Offices • Output fell 48% between (2008-10) • Demand high profile space and refit in GL • Surfeit office space outside GL

  13. Retail • 2008-09 – 26% fall • Expansion plans by major supermarkets and international investment • Negative LT Trend from internet sales

  14. Industrial Factories • 2007-09 – 40% fall • Growth due to manufacturing and exports • Not driving growth as much as Government anticipated

  15. Industrial Warehouses • 2008-09 – 56% fall in output • Recovery from low base due to: • Domestic demand • Long term boost - trend to internet shopping

  16. Roads • Highways Agency capital investment to fall 44% by in by 2013/14 • Only 14 major schemes to start before by end of 2014/15

  17. Rail • Network Rail fixed spend but post-2014? • Crossrail outside of this - £14.5bn to finish in 2018 • NAO – £1bn efficiency savings

  18. Energy • Nuclear programme • Near term work -decommissioning & prelims at Hinkley • Renewables, wind farms, offshore connections

  19. Private Housing RM&I • Slow economy and VAT - contraction in 2011 • 2012 – deferred consumer spending but CERT offset • 2013 onwards –Economy driven growth • Green Deal ???

  20. Public Housing RM&I • Driven by Decent Homes programme • £2 billion from CSR (optimistic!!!) • Programme to finish after this spending

  21. Summary • Contraction in 2011 & 2012 • Flat in 2013 • Return to growth only in 2014

  22. Risks to Construction • Pace of economic recovery • Impact of government policies • Growth strategy • Localism • Green Deal • Energy • Availability of finance • Effect of increasing material/product costs

  23. Construction Output (2010-15) Private Public inc PFI

  24. Contribution to Growth

  25. For further information contact: noble.francis@constructionproducts.org.uk www.constructionproducts.org.uk

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