Infrastructure spend should be stable or grow across both capital and maintenance. The main variable will be the level of outsourcing and the point in the spending cycle. For example, Network Rail has announced a reduction in certain spend categories in Year 1 of their cycle. New distribution (D) and transmission (T) cycles for utilities are: electricity 2010 (D), 2012(T); gas 2012(T),2013(D); water 2010.

Telecoms is one area where the Openreach contract uncertainty and mobile network sharing make the picture more difficult to predict. Power looks like it will continue strongly. Nuclear, renewables and carbon capture should provide real long term opportunities, and there appears to be plenty of activity in 2009.

Over the next two years the Government is committed to new build spend in Health, Education, Waste and Public Housing. PFI funding is facing current difficulties which could slow the pipeline. However, the Government and the European Investment Bank appear to be supporting the process with debt funding.

Maintenance spend in these local government markets is both non-discretionary and mostly contracted through the period.

Looking further over the horizon Government capital expenditure for 2013-14 is budgeted to fall to £22bn, half of 2009-10 levels. This dislocation in spend will create some shake out.

Revenue spending in the public sector will also come under pressure after 2011, spread unevenly across sectors.

Understanding public sector spending beyond 2011 is becoming a key strategic issue.

Forecast growth 2009 - 2001

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