Process investment `on brink of three-year decline'
15 Jan 2000
A buoyant year in 1996 will herald three years of decline in UK process plant investment, according to two market research reports on the sector. Only the food and drink and gas processing sectors are set to continue on an upward trend, say research firms MSI and March Consulting.
In 1996, `a release of pent-up demand following under-investment in the early 1990s' fed an increase in spending in the chemical, oil and gas production, water, iron and steel, food and drink and gas supply industries. Another contributing factor was an increase in product prices for some of the sectors, which freed up investment funds. Overall, says MSI, capital expenditure increased by 6 per cent, reaching £15.9billion. Of this, £7.5billion went on process plant - an increase of 7 per cent on the previous year. But spending is now set to decline steadily until 2001, MSI predicts.
A report from March Forecasting concurs with MSI. If the UK economy is to continue its recovery, says the report, investment demand should climb `quite rapidly' to supply increasing demand. However, it warns, recent manufacturing figures suggest that there is still capacity to spare.
