UK Construction growth has been downgraded, although private housing remains a key driver.
The outlook for the UK’s construction industry has been downgraded, with growth prospects diverging by sector and Brexit-related uncertainty intensifying, according to the Construction Products Association’s (CPA) latest forecasts. The CPA says that uncertainty around the UK’s withdrawal from the EU has persisted since the previous forecasts and estimates for growth are now weaker than before.
Six months ago, the 2019 construction output was forecast to rise by 2.3%; however, the CPA’s Winter Forecasts now anticipate activity to rise by only 0.3%.
The CPA says private housing and infrastructure sectors remain the primary drivers of industry growth in the coming years. It says that the confirmed extension of the Government’s Help to Buy scheme through to March 2023 continues to encourage housebuilding activity, with output forecast to rise 2% in 2019 and 1% in 2020.
Noble Francis, Economics Director at the Construction Products Association said: “Fortunes for construction depend greatly on which sector firms are operating in.
“Our latest construction forecasts are conditional on either a revised Brexit Withdrawal being agreed with the EU and getting through UK Parliament or a delay to Article 50. However, even if this occurs, the uncertainty surrounding Brexit is clearly affecting the construction industry in areas that require high investment up front for a long term rate of return such as commercial offices, which is expected to fall by 20% in 2019 on the back of sharp falls in new orders in 2017 and 2018. The construction of prime residential apartments and industrial factories is also being affected greatly by the high and rising Brexit uncertainty. However, whilst this uncertainty adversely affects some construction sectors, it provides a boost to others. The warehouses and harbours are relatively small sub-sectors but both are growing rapidly and are expected to enjoy double-digit growth this year as the demand rises for storage and trading facilities.”