Construction output in Great Britain expected to shrink this year

Economists at the Construction Products Association (CPA) are expecting construction output in Great Britain to shrink this year.

The CPA has downgraded its forecasts for total construction output once again amid continuing political uncertainty.

A year ago, the CPA was predicting growth of 1.4% in 2020 and 1.7% in 2021. Last summer this was revised downwards to 1.0% and 1.4% respectively.

Now it is saying that total construction output in Great Britain is forecast to fall by 0.3% in 2020, before a rise of just 1.2% in 2021. And that is assuming that HS2 is allowed to go ahead.

The CPA says that political uncertainty and bad weather led to a slowdown in construction activity towards the end of last year and it sees little evidence to suggest that the general election result will bring any benefit the construction industry in 2020. Those hoping for a Boris bounce are deluded it seems.

Despite the prime minister’s promise to ‘get Brexit done’ there remains substantial uncertainty for investors in areas such as prime residential, commercial offices and industrial factories. These big value sectors have seen falls in new orders since the 2016 referendum result, which has now started hitting activity on the ground. With the pipeline of work diminishing, there’s little in the form of new orders to replace projects completing in 2020, the CPA says.

Economics director Noble Francis, said: “Construction activity has tailed off since last summer with persistent rain affecting external construction. The main issue, however, was uncertainty, which hindered decision making, the signing of new contracts and new project starts on site.

“Looking at the year ahead, growth prospects for construction are fragile. While the short-term certainty provided by a majority in the general election does mean that day-to-day consumer spending will continue and a few more projects are likely to go ahead, further political and economic uncertainty beyond 31st December remains problematic for investment and activity. This is a particular issue in high value sectors such prime residential, office towers and factories which require certainty to justify investment and where new contracts often take 12-18 months to feed into activity down on the ground”.

“Prospects remain bright in areas such as warehouses and infrastructure. As ever though, government delivery of major infrastructure projects will be key to the fortunes of both the sector and the industry. Without this certainty, infrastructure activity is expected to remain flat and total construction output would be expected to fall by 0.9% this year”.