UK Construction Prospects

1. UK Construction Prospects Presented by: Allan Wilén, Economics Director Date: 23rd October 2012

2. MarketConditions • Double dip recession • Sharp falls in private sector construction in 2008 & 2009 • Renewed pressure from public sector cuts in 2011 & 2012 • Gradual private sector recovery

3. Construction’s clients • Government funded work has supported output • Recession hit private sector workload hard • Private non-residential building still a third of output • Private housing stabilised • Infrastructure & Utilities growth sectors

4. Government Policy: Key Department Spending

5. Government Policy • Looking to private sector investment to lead recovery • Government prioritising investment in infrastructure • Value of publicly funded new builds to fall over coming years • Focus on refurbishment and improvements • Return of PFI to bridge the gap

6. Social Housing

7. Education

8. Brighter Consumer Prospects? • Consumers hard hit since 2007 • Households hit by: • Weak earnings growth • Tax rises • Higher inflation • Debt levels remain high • Uncertain employment prospects • Restricted bank lending • Improved consumer confidence from late 2012? • Lower inflation • Moving out of recession

9. Housebuilders revisit sites

10. Private Housing • Sharp fall in project starts during 2008 & 2009 • Hesitant recovery in 2010 faded last year • Positive start to 2012 • Further recovery anticipated • Gradual rise in household incomes and confidence • Improved mortgage finance availability • Government initiatives to lift market

11. Office Construction

12. Industry Prospects • Public sector squeeze as capital funding cut • Slow private recovery • Offices, retail and industrial upturn • Increase in private housing starts • Private sector recovery hampered by access to capital • Improved consumer confidence • Refurbishment & retro-fit • Regional divide

13. Customer Satisfaction

14. On time & to budget

15. Any Questions?