The Construction Products Association (CPA) has released its Winter Forecasts, which predict a rise in construction activity this year of 0.3%.
The Winter Forecasts from the construction industry trade association – which represents tens of thousands of companies – has been downgraded from the predictions just six months ago, when output was forecast to increase by 2.3% in 2019.
Growth prospects are diverging by sector, according to the CPA, who also lay the downgrade at the door of the Brexit process, and the uncertainty it is creating.
Given recent events which show the government is nowhere near agreeing a deal to leave the EU, this uncertainty will only increase.
Investors have told the CPA that uncertainty means it is too risky to justify investment up front; however, this uncertainty could drive growth in other sub-sectors including the harbours and warehousing.
In the Winter Forecasts, the CPA reveal that the likes of private housing and infrastructure are driving industry growth, and are expected to do so in the coming years.
Housebuilding activity is being encouraged through the extension of the government’s Help to Buy scheme, and the CPA predict output will rise by 2% this year and 1% in 2020.
There is encouragement that the infrastructure sector will expand to its highest ever level this year, thanks in part to large projects like HS2, Thames Tideway and Hinkley Point C.
However, with Crossrail delays and cost overruns, there are still concerns in the ability to deliver major projects on time.
That being said, infrastructure is expected to increase by 8.8% in 2019 and by 7.7% next year.
Noble Francis is the Economics Director at the CPA. He believes that, even despite the Brexit-related uncertainty, output could outperform forecasts – though this is by no means certain.
He said: “If the government can improve its delivery of major infrastructure projects, then construction output could outperform our forecasts, in spite of Brexit uncertainty.
“However, it is a big ‘if’.”