The year ahead: 2010 predictions

Published:  17 March, 2010

What future for merchanting? The experts give their forecasts, based on the mood of the market. Lisa Arcangeli reports.

Slow protracted growth

The UK remained blanketed in recession during the third quarter of 2009, after the vast majority of countries had already started to grow again.

Official figures published at the end of January 2009 are anticipated to state that economic recovery began in thefourth quarter of 2009, in part due to spending brought forward by the Government, through fiscal stimulus, but also by consumers taking advantage of lower VAT and the car scrappage scheme in addition to exporters benefiting from a favourable exchange rate.

NBG's Allan DurningHowever, according to the Construction Products Association, economic recovery is expected to be both slow and protracted. Growth of only 0.7% for the economy is anticipated in 2010 with 2% growth in 2011 prior to a return to trend growth only in 2012.

According to the CPA’s Construction Industry Forecasts Winter 2009-2013,conditions for construction remain challenging, despite data for the fourth quarter of 2009 being expected to show that the economy had started its road to recovery.

Following on from 2009’s sharpest fall in construction on record, the industry is expected to contract a further 3% in 2010, prior to a return to growth in 2011 with the result that the construction industry will have suffered a deeper and more prolonged recession than the economy as a whole.

Private sector construction is suffering from sharp falls in the commercial and industrial sectors.

The commercial sector is estimated to have fallen 26% in 2009 alone – the sharpest fall on record and it is expected to fall a further 15% due to a lack of orders for new offices and retail properties.

NMBS' Chris Hayward.Likewise, due to a collapse in orders for new factories and warehouses, industrial construction work fell by an estimated 48% over the last two years and is expected to fall a further 2% during 2010.

Despite significant rises over the last six months, private housing remains at historically low levels.

Even with double-digit growth over the forecast period, continuing the growth seen in the second half of last year, private housing starts are only anticipated to be 92 000 in 2010, half the figure seen in 2007. Even in 2013, starts are expected to be 25% lower than in 2007.




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