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Thursday, April 13, 2023

Northern Construction boom ends as public investment slows down

The construction boom in the North of England has now ended as investment in public sector infrastructure has largely stagnated, according to the latest regional construction forecast, Foresight, from Construction Forecasting and Research at Experian, a leading economic forecasting group.

The decline in public investment will have a major impact on the north's overall economic prospects as construction has been the main contributor to the region's growth over the past five years.

Wales and the South of England will experience the strongest construction growth up to 2008. Wales will benefit from continued Welsh Assembly investment in public construction while output in the South of England will continue to expand in response to a growing population and buoyant private sector economy. However, a marked slowdown is forecast for all regions compared with growth between 2000 and 2004.

As public sector investment declines, private sector demand will drive the lion's share of construction growth up to 2008. Construction in the South, the East of England and Greater London will benefit from sizeable projects, including the Thames Gateway regeneration, the Olympic Games and planned improvements to infrastructure. Efforts to address the mismatch between housing supply and housing demand, both on the private and public side, will also have an effect.

Regions in the north will experience the slowest growth in construction up to 2008. Yorkshire and the Humber is expected to be the weakest region going forward, in stark contrast with the recent past when the region was one of the star performers. While lacklustre growth is forecast in all of the region's main sectors, a short-term decline in the sizeable private housing sector and stagnant commercial output will have the most significant constraining effect. Construction growth in the North West is forecast to be equally subdued and output is estimated to rise by just 5 per cent to 2008.

Across Great Britain as a whole, construction output is forecast to rise by 13 per cent to 2008. Growth is forecast to trail the national rate in five out of eleven regions, namely Yorkshire and the Humber, the North West, the East Midlands, Scotland and the North East. Increases in the South West are forecast to be in line with the national average and output growth is expected to be better than the average in the remaining five regions, the West Midlands, South East, Greater London, East of England and Wales.