Project Scotland

Concerns grow despite record output

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NEW figures show a record output for the Scottish construction industry – but industry chiefs have warned that current growth levels are not sustainable and there has been an “over-reliance” on the infrastructure sector.

Data from the Office of National Statistics reveals output from the Scottish construction industry rose to over £14 billion over the 12 months to September this year. This compares to a previous record output of more than £13 billion over the 12 months to June.

Vaughan Hart, managing director of the SBF, said, “Of course, following the recession, the recent impressive growth in construction sector output is great news with output showing a new record high of more than £14 billion over the 12 months to September 2015. However, these latest output figures reinforce the key finding of the Ernst and Young report published earlier this week: Namely, that the Scottish economy has become overly reliant on major infrastructure projects as the main source of economic growth and that this is not sustainable in the long term.

“Unfortunately, growth is not balanced across different sectors of the Scottish construction industry. As an overall percentage of Scottish construction industry output, infrastructure has risen from around £1.5 billion or 13% of total industry output over the 12 months to September 2008 to almost £4 billion or 28% over the 12 months to September 2015. As a comparison, new housing was worth around £2.5 billion or 22% of total industry output in 2008 but is now worth £2.2 billion or 16% of total industry output. Private commercial activity has also declined over that period from £3.1 billion or 26% of total output seven years ago to £2.4 billion or 17% today.

“Based on this analysis, I have to agree with the assessment that current rates of output growth in the Scottish construction sector are not sustainable and suggest an over-reliance on the infrastructure sector of the industry as the main source of this growth. In making future investment decisions, there needs to be a continued focus on balancing the industry’s performance across different sectors so as to put the industry’s recovery on a more sustainable footing for the longer term.”

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