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

Market Conditions  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

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

Government Policy: Key Department Spending 4

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

Social Housing

Education

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

Housebuilders revisit sites

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

Office Construction

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

Customer Satisfaction

On time & to budget

Any Questions?