Spending review could have 'negative impact on construction'

Published:  01 December, 2010

Management consultant, Leading Edge, has released its bi-annual report predicting the effect of the comprehensive spending review on the construction sector.

The firm believes the review in October "will negatively impact many businesses who are reliant on construction activity in the public sector". It says that, with the exception of energy and climate, the government departments with the biggest influence on construction output "will see their capital budgets reduced over the next four years".

Furthermore, it said across the key departments, the total cuts will reduce capital budgets by around 40% by 2014/15, excluding inflation.

It predicted total construction output in Great Britain for 2010 is expected to reach 97.8 million at constant 2005 prices, 3.2% up on 2009. This is based on the recently-released Q3 output figures.

Managing director, Mel Budd, said: "This growth has been driven in part by strong figures from the public sectors during the year and the beginning of recovery in output for private industrial and commercial in Q3."

Budd also believes, however, that the official statistics are "at odds with the current sentiment in the market, and we may see a downward revision by the Office for National Statistics as more data becomes available".

He added: "Overall, we forecast slow growth for the construction industry as a whole from 2012 onwards, with total output in 2014 still 7.5% lower than the 2007 peak."

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