Fresh concerns over infrastructure delivery and the threat of a no-deal Brexit scenario have led the Construction Products Association (CPA) to downgrade its three-year industry growth forecasts.
The CPA’s summer forecast for 2019-2021 sticks with previous predictions of a 0.3% decline in total output for this year, but the projection for 2020 has been cut from 1.4% to 1.0% and 2021 is now expected to see 1.4% growth, downgraded from 1.7%.
With major infrastructure projects predicted to be the main underlying drivers of construction industry growth over the next few years – the CPA’s modelling forecasts a 1.7% contraction without them – new uncertainties have contributed to the downgrading of expectations.
The CPA points to strong activity regionally, with private and public housing, industrial warehousing and infrastructure contributing to the overall growth figures for the next three years, but these are predicated on a ‘smooth’ Brexit scenario. The new Prime Minister, Boris Johnson, began his leadership with a stated commitment to high speed rail in the north, but a growing likelihood of no-deal under Boris Johnson’s leadership and his pledge to review HS2 after new cost warnings, have created fresh uncertainty, the CPA says.
“Construction output in some sectors has already been badly affected by Brexit uncertainty over the past 18 months and when you add in rising concern about government delivery of major infrastructure, it is a highly uncertain time for the construction industry,” said the CPA’s economics director, Noble Francis.
Falling output
“Activity on the ground, overall, still remains at a high level after rising by 28% between 2012 and 2017. However, output growth slowed to only 0.3% in 2018 and we forecast that construction output will fall by 0.3% in 2019 before growth of only 1.0% next year, even with a smooth Brexit and with government delivery of infrastructure projects.”
The CPA’s summer forecast analyses activity across thirty different industry sectors. Infrastructure is the biggest growth area, with 9.3% growth predicted this year on the back of major projects including the £19.6bn Hinkley Point C and £4.2bn Thames Tideway.
Funding for other infrastructure projects, including local authority roads, has been expected to emerge strongly over the next year after a decade of austerity, but this now faces growing uncertainty. Falls in output in the largest two sectors, private housing and commercial building, have added to the concerns, the CPA reports.
Housing starts are expected to fall 2.0% this year, although the figures vary considerably by region, with growth in the north offsetting contraction in London and the south east. The commercial sector in particular is being hit by Brexit uncertainty, with the 2018 output fall of 6.4% expected to be followed by further contraction of 6.9% this year and 4.7% in 2020.
“Overall, especially given the current high level of uncertainty, it is essential that government commits to better delivery of the major infrastructure projects that it says are essential for the country,” Francis said. “Only then will construction provide a boost to UK economic growth and give firms the confidence to invest in vital capacity and skills as well as modern methods of construction such as digitalisation and offsite manufacturing.”
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Hs2 should have been designed like geometric branches on a tree easy lines to follow the main trunk carries HS2 and branch lines to left and right carries the modern trams to towns and cities. Stations spread out on main line and a variety of junctions interconnected to tend the outlying towns and cities.This design allows the main line to be built in less populated areas, quickly and efficiently. Branch lines can be added when afforded. The out come would carry less bragging rights ,but easier planning and spending which is better spread over time
The current plan is typical of the late 1800’s.