Biggest sectors set to contract due to long-term uncertainty despite decisive Conservative victory
More than 拢210bn of construction work is set to get under way over the next two years, the latest forecast from the Construction Products Association has revealed, although activity will dip in 2020.
In its winter forecast 2019-20, the CPA says almost 拢106bn of new work is forecast to come to market this year, while it predicts 拢107bn will to be up for grabs in 2021.
Around 拢41bn of new housing work is set to get under way in 2020, with 拢35bn coming from the private sector and 拢6bn from the public sector. This represents a slight contraction of 0.6% in new housing activity compared with 2019.
The commercial sector is expected to produce the most work outside housing, with 拢26bn of work forecast for this year. But this signals a 4.2% drop from the amount that hit the market last year and is the third year in a row that commercial workloads have fallen.
Public and private sector construction output
| Public and private sector construction output | ||||
|---|---|---|---|---|
|
|
2018 | 2019 | 2020 | 2021 |
| Change on previous year in 拢m | Actual | Estimate | Forecast | Projection |
|
Public sector including PFI |
37,756 -3.6% |
38,955 3.2% |
39,317 0.9% |
39,999 1.7% |
|
Private sector |
122,867 1.3% |
122,699 -0.1% |
121,894 -0.7% |
123,121 1% |
|
Total construction |
160,623 0.1% |
161,654 0.6% |
161,212 -0.3% |
163,120 1.2% |
|
Source: CPA / ONS |
>> Comment: CPA鈥檚 Rebecca Larkin on the latest forecasts
The CPA said there was still not enough long-term certainty for investment in the largest tower and mixed-use projects, despite the Conservatives winning a majority and parliament passing the EU withdrawal bill. Even if more long-term certainty was established, it would take time to filter through to the biggest projects, although some benefit would be seen sooner.
The pipeline is expected to increase by 3.4% to 拢23bn this year and another 5% to almost 拢25bn in 2021
It said: 鈥淭he lag between new orders and output on the largest offices projects averages 12 to 18 months, indicating that even a significant upturn in new contracts signed would only see activity on the ground towards the end of 2021.
鈥淗owever, long-term certainty would still suggest a short-term boost to activity in the commercial sector as medium-sized projects currently on hold would be able to start relatively quickly.鈥�
Infrastructure is also forecast to produce significant workloads, with the pipeline expected to increase by 3.4% to 拢23bn this year and another 5% to almost 拢25bn in 2021. The CPA said it was not particularly concerned about HS2 being abandoned as, even in the light of this week鈥檚 leaked report, the prospect seemed unlikely.
It said: 鈥淟ong-term concerns regarding the future of HS2 remain, although cutting back at this stage appears difficult given that key areas for cost savings would be either the costly Old Oak Common to Euston section, which is already under way, or the northern section that is deemed politically vital.鈥�
All construction work, including repair and maintenance, is expected to be worth 拢161bn this year, a 0.3% dip in output before bouncing back by 1.2% to 拢163m.
>>
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