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United Kingdom Infrastructure Report Q4 2009Published by: Business Monitor International Published: Sep. 16, 2009 - 58 Pages Table of Contents
AbstractWe have adjusted our forecasts to a slightly less bearish scenario for 2009 this quarter. We now expectthe construction sector to contract by 11% in real terms in 2009, compared with our previous forecast thatit would contract by 13%.The UK's strong links to the US economy and its over-dependence on the financial services industry as anengine of growth have made it particularly vulnerable to the economic fallout from the turmoil in US. Theslight improvement in our 2009 construction forecast is due to the recent slight improvement in ourforecast for real GDP growth in the UK (and for gross fixed capital formation). We forecast that the UK'sconstruction sector will experience negative real growth in 2010 in the order of -4.6% (an improvementon our earlier forecast of -7.1%), with positive growth resuming in 2011. This quarter we update our analysis of Balfour Beatty, on the back of H109 results. Our earlier positiveevaluation of the firm has been borne out by the latest results, as underlying pre-tax profit (beforeexceptional items and amortisation) rose 14% y-o-y in H109, to GBP108mn (US$178mn), fromGBP95mn (US$157mn) in H108. The company cites growth in the US markets as a key driver, which forthe period accounted for 30% of the group's total revenue. Going forward, the company retains a strongorder book, thanks not only to the high availability of contracts in the US, but also significant contractsrelated to infrastructure investment in the UK. In mid-July 2009, the UK government unveiled its White Paper on a new climate and industrial strategythat focuses on creating a low-carbon economy by 2050, centred around transforming the power mix torely mainly on low-carbon sources. The government said it wants 40% of electricity to come from lowcarbonsources by 2020, 30% of which will come from renewable sources, mainly wind. Though very fewfinancial pledges were made - a mere GBP120mn for the offshore wind sector - the White Paper notesthat financial incentives will come through increasing renewable obligation certificates (ROCs), as wellas streamlining the planning process for new wind farms. This process is already under way. Part of the2009 Budget was provisions for offshore wind generation through increasing ROC points to two perMWh of offshore wind energy produced - an increase from the current one point that is issued. Inaddition, GBP525mn was allocated to support offshore wind power projects. Get Full Details About This Report >> |
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