London’s successful bid for the 2012 Olympic Games could give a welcome boost to the construction industry as early as 2007, according to the latest national construction forecast by Experian.

Construction output exceeded the £80 billion mark in 2004 for the first time, but a weaker housing market and overall economic weakness mean a more subdued outlook is in prospect. Public sector investment will account for the lion’s share of construction growth while the private sector will struggle to move forward with the current market uncertainties, said the global information solutions and economic forecasting group.

From 2007, the outlook is significantly more positive as private housing, both new build and repair and maintenance work, recovers and infrastructure output registers strong growth after declining substantially in 2003 and 2004.

Robust growth in the infrastructure sector will be the main driver of this growth, particularly as already-committed rail investment, a fundamental element in the success of London’s bid commences. Work will focus on refurbishment of all London Underground stations, the east London extension to the Docklands Light Rail and the £1 billion extension of the East London Line.

James Hastings, Associate Director of Experian’s Business Strategies division, commented: "London’s successful bid for the 2012 Games will certainly boost construction output in the UK, particularly infrastructure and non-residential sectors. Total capital investment is expected to be in the region of £8.6 billion. The largest section of investment, some £6.3 billion, will be focused on improving London’s transport infrastructure."

"Initial work is already underway but the bulk of work is expected to commence in 2007 and beyond. This work is the main driver of our robust forecast for construction output growth in 2007."

"The remaining £2.3bn will be invested in Games specific capital, such as the Olympic Village and numerous sports venues. Whilst we do not expect this work to peak until at least 2009-10, initial work could start as early as 2007. As a result, our 2007 forecast could be a little on the low side and growth could quite possibly exceed 4 per cent."