Hewes & Associates’ latest forecast – Construction Outlook: July 2010 - shows the pace of decline in the volume of GB construction slowing, from 11.5% in 2009 to 6.5% in 2010. A fall of 4% is forecast for 2011, while in 2012 a marginal decline is expected.

Measured in current prices, the value of total industry output fell by 13.7% in 2009. The July 2010 report forecasts the value of output falling by 7% in 2010 and by 3% in 2011. Growth of 0.5% is forecast for 2012, by which time output will be close to £97 billion in value. By 2012 we expect the value of output to be almost £27 billion or 22% lower than in 2008.

Despite a forecast fall of 33% to £6 billion in 2012, education building (both public & private) will remain the largest non-residential market. Private housebuilding is expected to remain weak (and roughly 50% below the 2007 peak) to the end of 2011 at least. Meanwhile, we stick with our previous forecast of house prices falling in both 2010 and 2011.

The forecast of a prolonged weakness in total industry output relates to sharp falls in public investment (from 2010) alongside modest increases in private investment (from 2011).

The UK recession may be over, but the factors that prompted it are still with us and yet to be addressed. The build up of debt that facilitated growth in the boom years, and masked many an economy’s ills, will limit economic growth over the foreseeable future.

Construction Outlook provides both current and constant price forecasts for all GB construction markets. It is released four times a year: January, April, July & October, and can be ordered via our web site. Samples copies are also available from the web site: www.hewes-associates.com