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Hinkley Point C delays cut Experian forecasts by 1.5 ppts

Concerns over the delivery of Hinkley Point C’s new nuclear plant have seen Experian cut its construction forecasts for the next three years.

The forecaster now expects construction output to grow by 7.8 per cent between 2016 and 2018, down from 9.3 per cent in its previous forecasts, released in January.

Previous forecasts had factored in works at Hinkley beginning in 2017, but delays have pushed the majority of this work outside Experian’s forecast period.

As a result, infrastructure forecasts for 2017 have been revised down from growth of 12 per cent to just 6 per cent in the latest analysis.

Despite these revisions, infrastructure work will still account for 15 per cent of total construction output in 2018, up from 11 per cent in 2013.

Total output growth has also been lowered for 2016, primarily due to a slowdown in non-residential construction caused by the global economic slowdown and the uncertainty over June’s EU referendum.

In its winter forecasts, Experian had expected output to grow by 2.6 per cent in 2016, followed by 3.9 per cent in 2017 and 2.6 per cent in 2018.

The latest forecasts point to growth of 2 per cent in 2016, followed by 2.9 per cent in 2017, while its prediction for 2018 remains unchanged.

Experian expects an increase of 2.6 per cent in fixed investment for 2016.

However, private housing forecasts have held steady since earlier in the year, with growth at 5 per cent for 2016, followed by 4 per cent and 2 per cent in 2017 and 2018 respectively.

Elsewhere, both the industrial and private commercial sectors will remain strong, with growth of between 3 and 5 per cent per year expected over the forecast period.

By 2018, private commercial will be the largest sector by output value at £26.48bn, with private housing the second largest at £26.45bn.

Public housing will continue to perform poorly after recording a 14 per cent decline in 2015; output will fall by 8 per cent in 2016 and 3 per cent in 2017.

Experian is the second forecaster to cut its expectations for growth in the last week, after the CPA revised its forecast for 2016 down to 3 per cent on Monday.

 

 

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