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CN briefing: CPA forecasts; Hinkley Point C; Lakehouse; HS2 stations

’One per cent’ doesn’t sound like a lot.

But consider the fact that 1 per cent of the industry in 2015 was worth £1.3bn in output. That’s still a lot of potential business for contractors.

This time last year, the Construction Products Association was expecting output growth of 4 per cent in 2016, which was subsequently revised down to 3.6 per cent at the start of this year, before being cut to only 3 per cent in its latest forecasts, revealed this week.

The main cause of the revisions, particularly to the latest set of forecasts, has been the lingering spectre of global economic troubles.

With GDP growth slowing to 2 per cent in 2016, and the looming EU referendum adding to the cocktail of uncertainty, it’s no surprise that the association is tempering its outlook.

Works at Hinkley Point C have been factored into the forecasts from 2018 – but given the number of delays to EDF’s final investment decision, that could still be pushed back further.

There are more mixed messages coming out about the £18bn project, with France’s economy minister saying that the project will go ahead ahead, while Ségolène Royale, the energy minister, has said it could still be postponed.

Whatever happens, the CPA is still largely basing its growth forecasts on two sectors – infrastructure and private housing.

Infrastructure work is forecast to grow by 56.3 per cent by 2019, making it the fastest-growing of any sector in the construction industry over the four-year forecast period.

The UK’s connectivity, road, rail and energy generation demands make growth in the sector almost a given, while the government has shown increasing willingness to back it with public money, helping major projects to secure financing and get underway.

Private housing output will continue to be strong, albeit growing at a slower pace; a 4 per cent increase is expected in 2016 and 2017, followed by subsequent growth of 2 per cent in 2018 and 2019.

Perhaps significantly, it’s the two sectors that have been backed by either public money – infrastructure – or government incentives – private housing – that are driving the growth.

Public housing starts are forecast to dip by 5 per cent this year, and will remain flat each year from 2017 to 2019.

Likewise, public non-housing work has the slowest growth rates outside of public housing for the next four years.

While focused government investment is welcome, other sectors of the industry cannot afford to be left behind - meaning the onus is on the private sector to step up and deliver.

Also in the news

It looks like Lakehouse’s boardroom battle is finally over. Founder Steve Rawlings has returned to the board, with non-executive chairman Chris Geoghegan standing down. Deputy news editor Robyn Wilson has all the details.

On the subject of infrastructure, our reporter Jack Simpson brings news that bidding for High Speed 2’s four phase one stations will get under way at the start of 2018. That’s potentially billions of work heading your way in only two years.

CN has appointed 10 industry leaders to an advisory board for the the two-day Construction News Summit in October. 

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