BMI View : We maintain our forecasts for construction industry value real growth in the UK at 3.5% for 2016 , with our 2015 estimation coming in on the mark . R esidential building will drive this growth over the coming five years as government attempts to boost output , although we do not expect targets to be met. We are now highlighting the upside potential to our long-term infrastructure forecasts as major rail projects move forward, although note new nuclear power and airport investments are not yet factored into our forecasts.
Latest Updates And Structural Trends
We have increased our forecasts for the residential building market, which will remain buoyant - averaging real growth of 4.2% between 2016 and 2020. By 2017 local councils must submit plans to help the government reach its target of building 200,000 starter homes by 2020 or they will be forced to do so by central government.
Several major infrastructure projects are yet to be fully factored into our forecasts due to slow progress on investment decisions, but already the UK has Europe's largest infrastructure project pipeline. We currently forecast average annual real growth in infrastructure of 6.3% over our forecast period. The upside to this has been added to by the 2016 budget announcements that the government will support HS3 and Crossrail 2 - both multibillion pound projects.
We hold a muted outlook for the non-residential building segment, largely on account of the upcoming EU referendum which we expect will heavily impact on business investment. Regardless of the outcome, the uncertainty over the impact of a vote to leave will see business hold off on expanding capacity. Furthermore, government austerity continues to see social housing, education and healthcare infrastructure suffer from a lack of investment.
|e/f = BMI estimate/forecast. Source: ONS, BMI|
|Construction industry value, GBPbn||104.29||108.98||113.67||118.22||123.65||129.09||135.16|
|Construction Industry Value, Real Growth, % y-o-y||3.37||3.50||2.60||2.05||2.55||2.40||2.85|
|Construction Industry Value, % of GDP||5.7||5.7||5.7||5.7||5.7||5.7||5.8|
The UK remains a top performing market in our Infrastructure RRI for Western Europe and North America in Q216, with a score of 72.5
The large size of the UK's construction sector and continuing investment - especially in the rail sub-sector - help the country achieve an Industry Rewards score of 57.5.
The UK scores well in global terms in the Country Rewards Index, with a score of 88.9. The UK has a long established and strong financial market, which is ideal for the infrastructure industry's need for long-term capital.
|Risk/Reward Index||Rewards||Industry Rewards||Country Rewards||Risks||Industry Risks||Country Risks|
The United Kingdom Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
BMI's United Kingdom Infrastructure Report provides industry professionals and strategists, sector analysts, investors, trade associations and regulatory bodies with independent forecasts and competitive intelligence on the British infrastructure and construction industry.
- Benchmark BMI's independent infrastructure industry forecasts for United Kingdom to test other views - a key input for successful budgetary and planning in the British infrastructure market.
- Target business opportunities and risks in the British infrastructure sector through our reviews of latest industry trends, regulatory changes and major deals, projects and investments in United Kingdom.
- Assess the activities, strategy and market position of your competitors, partners and clients via our Company Profiles (inc. SWOTs, KPIs and latest activity).
BMI Industry View
Summary of BMI’s key industry forecasts, views and trend analysis covering infrastructure and construction, regulatory changes, major investments and projects and significant national and multinational company developments. These are broken down into construction (social, commercial and residential), transport (roads, railways, ports, airports, etc), and energy & utilities (powerplants, pipelines and so on).
Industry SWOT Analysis
Analysis of the major strengths, weaknesses, opportunities and threats within the infrastructure and construction sectors and within the broader political, economic and business environment.
BMI Industry Forecasts
Historic data series (up to 2012) and forecasts to end-2024 for all key industry indicators, supported by explicit assumptions, plus analysis of key developments in the market and risks to the main forecasts. Indicators include:
Construction: Industry value (USDbn); contribution to GDP (%); total capital investment (USDbn); real growth (%).
Construction industry real growth forecasts (%) and industry value (USDbn) forecasts for industry sectors are split into Residential and Non-residential and Infrastructure sectors. Where the data is available for particular countries the infrastructure is further broken down into indicators for the transport subsectors of roads, railways, airports and ports and the energy and utilities sub-sectors of power plants and transmission grids, oil & gas pipelines and water infrastructure. This dataset is unique to the market.
The reports also include analysis of latest projects across the infrastructure sectors (transport, utilities, commercial construction).
BMI’s Infrastructure Risk Reward Index
BMI’s Risk Reward Index provides investors (construction companies, suppliers and partners) looking for opportunities in the region with a clear country-comparative assessment of a market’s risks and potential rewards. Each of the country markets are scored using a sophisticated model that includes more than 40 industry, economic and demographic data points. These provide indices of highest to lowest appeal to investors, with each position explained.
An assessment of the competitive landscape and key challenges to entering the market. Details of the largest companies active in the sector across the sub-segments of the industry, including the key financial figures from some of the largest players in the sector.
Examines the competitive positioning and short- to medium-term business strategies of key industry players. Strategy is examined within the context of BMI’s industry forecasts, our macroeconomic views and our understanding of the wider competitive landscape to generate company SWOT analyses. The latest financial and operating statistics and key company developments are also incorporated within the company profiles, enabling a full evaluation of recent company performance and future growth prospects.
The Infrastructure reports draw on an extensive network of primary sources, such as multilateral organisations, government departments, industry associations, chambers and company reports.
*Company profiles are not available for every country. Those reports instead contain information on the current activities of prominent companies operating in the market.