Featured sector: Infrastructure

The infrastructure sector has enjoyed three successive years of growth in project starts. Project starts rose by 7% and 10% during 2012 and 2013 respectively, with the value of underlying starts increasing by a further 10% last year. Whilst the medium term prospects for the sector remain positive, the current year is expected to be one of consolidation before growth resumes in 2016.

Government investment in recent years has been focused on rail related projects. We expect there to continue to be a high value of rail investment as Network Rail rolls out its five year investment programme and with several major projects slated to start over the next few years. However, we also now anticipate spending on the road network, which has been relatively neglected in recent years, to rise.

On the longer term horizon, the 2013 June Spending Round brought further commitments to infrastructure spending from the government. That the Department for Transport capital budget will be set at £9.5bn in 2015-16, representing a real terms increase of 5.5%, bodes well for sector prospects at the start of the new parliament. However following the surprise Conservative majority, it will be the Chancellor's upcoming emergency budget that provides a greater steer on upcoming investment. Previous pledges for additional road funding have been concentrated on the later years of the new parliament and even beyond the 2020 election.