PRESS RELEASE BY MBD...

UK PFI CONSTRUCTION MARKET RESEARCH REPORT

RELEASED: FEBRUARY 2008

After researching the UK PFI construction market development and taking into account various other factors the following conclusions can be drawn from MBD's report:

MARKET REVIEW 2003-2007:

The annual value of PFI deals has fluctuated strongly throughout the review period. Partial year data identifies the value of deals signed was £3.6 billion up to October 2007, although this represents a strong decline of 49% compared with the previous year. This decline partially negated significant growth of 102% in 2006. Prior to this, notable growth of a highly significant 246% and 106% was recorded in 2002 and 2003 respectively, with the value of deals peaking at £16.1 billion in the latter year.

Partial year data for 2007 indicates the health sector represents the largest proportion of PFI contracts signed, accounting for 43% of the total, equivalent to deals of £1560 million. During the same year, the Scottish Executive is expected to command the second largest share, representing 25% of total PFI deals signed. The proportional importance of the transport sector is believed to decline from 79% in 2003 to 2% in 2007.

MARKET FORECAST 2008-2012:

PFI capital expenditure is projected to increase by 3% in real terms to a peak of £5 million at 2007 prices in 2007/08. Growth in the year reflects continued investment in the education, health and waste sectors. However, this is expected to be followed by a strong 18% decline to £4.1 billion (at 2007 prices) in the following year. Between 2009/10 and 2011/12, annual levels of PFI expenditure are anticipated to oscillate between £4.1 billion and £4.3 billion (at 2007 prices). Moderate fluctuations are believed to reflect a certain level of maturity in the market.

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