Nursery sector faces limited growth prospects

9 August 2011 1 min read Janaki Mahadevan Early Years

Nursery providers are beginning to see more stability following the recession, but cuts to childcare tax credits and the increase in more informal childcare arrangements are likely to stunt growth in the sector in the coming year, a market intelligence provider has reported.

In its annual publication on the state the nursery sector, Laing & Buisson said the UK market had increased in real terms by one per cent, or around £4.1bn.

But on average occupancy figures for nurseries have remained relatively static, with a vacancy rate of 18.2 per cent in March 2011, compared with a 17.5 per cent the previous year.

Author of the report economist Philip Blackburn said: "The children's nurseries market looks to be in fair shape post-recession, as recent contraction appears to have levelled off.

"However, a number of economic risks have the potential to dampen demand for children’s nursery care going forward, not least very weak economic growth in 2011, and heavy fiscal restraints on public spending.

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