ABSTRACT
Building output in the UK increased each year between 1995 and 2010, benefiting greatly from the expansion in the UK economy in that period. Activity in building was especially robust between 2000 and 2004, with annual expansion averaging over 4
per cent. However, output fell in 2005, mainly because of a depressed housing market and reduced spending in the public sector as a result of financial constraints. This depressed trend continued in 2010 and was dampened further by cuts in the public sector. Historically, building (excluding new housing) has grown in line with GDP but with
much sharper peaks and troughs – particularly in the late 1980s and early 1990s. However, since 1995 this relationship appears to have changed, and the industry has become slightly counter-cyclical. This reversal may be due to the emergence of longerterm initiatives such as facilities management (FM) and PFI that have had the effect of smoothing out the cycles. Greater London, the south-east of England and the east of England have enjoyed growth in output since the mid-1990s. However, building output in Greater London fell in real terms by 5 per cent between 2003 and 2005. This was partly due to a reduction in major infrastructure projects and has since been reversed following the award of the 2012 Olympics to London.
