UK sector records solid growth again as nation’s appetite (and we can assume same for Ireland) for infrastructure provides no shortage of opportunities, finds EA report.
The UK environmental consulting (EC) market grew by 5.1% during 2017 to reach £1.74bn and is set for a similar 4.7% increase when figures are finalised for 2018, according to the latest research report published by Environment Analyst.
Infrastructure opportunities, increased public sector spend and more effective management structures forged during the fires of the last recession are helping consultancies to achieve continued healthy organic growth and feel confident in the face of Brexit.
The importance of infrastructure
Continued strong demand for environmental services supporting infrastructure & development clients, in tandem with a resurgence in public sector receipts, enabled the EC sector to once again outperform GDP and offset any Brexit-induced uncertainty. Revenue from I&D projects jumped 20% in 2017, equivalent to an extra £80m in EC revenues. In particular, opportunities associated with the High Speed 2 rail line, Highways England’s first road investment strategy and the government’s enhanced commitment to house building are keeping the sector in rude health.
Nevertheless, a somewhat unexpected dip in EC spend from the regulated industries (water, energy and waste management sectors combined), and a less surprising fall in spending from manufacturing, industrial and extraction clients put the breaks on overall market growth rates. Interestingly, this is the first time since 2014 that any of the major client sector groupings assessed in the UK EC market study have seen significant declines.
EA’s findings suggest the UK EC sector is developing quite a reliance on I&D clients with over two-thirds of the additional revenue added in 2017 from this source – without which market growth would have been just 0.3%. So the next few years will be crucial to the ongoing success of the industry with the state of public finances post-Brexit likely to impact the support given to major infrastructure projects. Nevertheless, the national infrastructure and construction pipeline remains at an encouraging £413bn (EA 05-Dec-18), and with the government’s promise that “austerity is coming to an end” it has a clear ambition to spend its way out of Brexit troubles, which should keep prospects there for the future.
Indeed, the return of public sector spending over the last three years has helped to bolster EC growth rates of late. Revenue sourced from central government and its agencies, as well as local authorities, grew by 11.3% in 2017 to approximately £340m – its highest value since 2010. And this important sub-sector is expected to grow again by around 5.5% in 2018 with the work programmes relating to Brexit requiring external support.
Further findings from EA’s latest market analysis include:
- Environmental Impact Assessment (EIA) & sustainable development remains the highest earning service area in the EC market accounting for 16.2% of revenue, followed by water quality & resources management (14.6%) and then ecological/landscape services (13.4%). In terms of annual growth, the environmental management & compliance service area led the sector in 2017 with growth of +15%, followed by water quality & resources management (+12%) and ecological/landscape services (+9.2%). Contaminated land and remediation was the only service area to record a decline in the period (-5.0%)
- Infrastructure & development clients contribute to 28.4% of the total market, with the next biggest spender being the regulated industries (27.4%) and then government bodies (20.1%). Revenues earned from I&D has increased by £179m since 2013, indicative of the boom in this area. Revenues from extractive, manufacturing and processing clients fell by 9.7% in 2017 against a backdrop of still-fluctuating oil prices
Source – Environment Analyst