Big infrastructure projects boost UK construction

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UK construction work is expected to grow over the next two years, generating significant profit due to a surge in major infrastructure projects…

New figures have forecast the construction sector will see growth over the next two years.

The Construction Products Association (CPA) said work was expected to increase 3.6 per cent this year before rising 4.1 per cent in 2017. It is estimated this will generate more than £10.4bn for the building industry, which accounts for 6.3 per cent of GDP.

The end of 2015 and start of 2016 saw a slow start due to the poor weather. However, economics director of the CPA Noble Francis said the industry was still “positive about the next 12-18 months because the fundamentals in the sector are still good.

He added: “It’s been a tough decade for the industry due to the prolonged impacts of the financial crisis so the growth is a welcome relief.”

Among the reasons for growth is the government’s push for major road, rail, and energy infrastructure projects. Additionally, the increasing number of new homes being built has pushed the sector to develop.

Historically, housebuilding has been the main driver of growth over the past three years, but infrastructure is set to overtake, with work forecast to rise by some 56.9 per cent by 2019.

Work includes the £563m upgrade of Bank Station in central London, the electrification of cross-country routes, and the development of HS2.

However, the CPA warned some infrastructure programmes could be delayed or cancelled. The electrification of the Midland Mainline and Transpennine routes is one such casualty. Work will not start until 2019.

Additionally, the nuclear power station at Hinkley Point C may also stall due to financing firm EDF delaying its final investment decision.

Scheduling problems with road construction and budgeting issues could also see upgrading of the nation’s network refocused on a smaller number of projects.

In 2011, the government revealed some 500 building projects in the National Infrastructure Plan, aimed at pulling the nation out of recession. However, the Treasury failed to raise £20bn needed to invest in infrastructure from pension funds. In fact, only £1bn was raised, most of which was invested in low-risk projects to fund schools and hospitals. Between 2010 and 2014, infrastructure funding fell some eight per cent.

Private house building has seen growth, due in part to the government’s push through schemes such as Help to Buy. This is expected to increase a further 22.7 per cent in the next two years. However, difficulties recruiting skilled workers and rising costs is expected to slow growth.

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