Britain’s construction industry bonanza has peaked, according to forecasters who say it will slow rapidly over the next two years.

A fall in public sector construction funding is blamed for the slowdown by business solutions company, Experian.

In a new report, it said construction output in 2004 is expected to rise by 3.2%, down from 4.3% in 2003. And, in 2005, growth is forecast to moderate further to 1.8% before increasing strongly to 2.7% in 2006.

Jane Croot, assistant director at Experian’s business strategies division, said: “The construction industry has been propped up by public sector funding and the current slowdown is due to a lack of private construction activity.”

She said the recession in the south of England’s office market has affected commercial construction, while industrial construction continues to struggle from a weak manufacturing industry.

However, private housing is strong, although growth is forecast to slow as the housing market cools.

Ms Croot said: “The main driver of construction output continues to be the government’s commitments to improvement in transport, infrastructure, health, education and social housing.”