The Construction Products Association (CPA) has downgraded growth for the sector in its Autumn Forecasts, amid ongoing Brexit uncertainty and delays in infrastructure project delivery.
Supporting tens of thousands of companies, the CPA is well placed to assess the interests of the construction sector and in the latest Autumn Forecasts, the growth for this year will remain flat.
However, for 2019, the CPA has downgraded growth in the construction industry from the previous estimate of 2.3% to just 0.6%.
According to the Autumn Forecasts, the two main drivers of the downward nature of growth are the continued delays to the delivery of major infrastructure projects, and ongoing Brexit uncertainty.
At a time when construction output is showing signs of recovery following a difficult start to 2018, this news is most unwelcome for the wider industry.
However, Brexit and the associated issues are driving expectations for the sharpest decline in the commercial sector, which will be particularly felt in the offices sub-sector.
Because of the high level of uncertainty given so much of the talks seem to be unresolved, investors are put off from providing up front investment in new floor space for a long term rate of return.
Infrastructure remains a primary reason for growth in the construction sector; this is perhaps unsurprising given the role of large scale infrastructure projects including HS2, Crossrail and Hinkley Point C.
These developments and other significant ones in infrastructure are expected to push output up to £23 billion by 2020.
However, concerns remain about the ability of the government to deliver these major infrastructure projects without overruns on costs and time of delivery – this has been witnessed recently with the announcement of delays to the opening of the Elizabeth line.
The CPA’s Economics Director, Noble Francis, believes that infrastructure has an important role to play in the growth of output.
He said: “Construction continues apace in some sectors such as house building, particularly in key hotspots of activity such as Manchester and Salford.
“Overall, we are still expecting construction output to increase next year but this growth is highly dependent on house building outside London and also major infrastructure projects offsetting falls in activity in other sectors.”