Construction Industry Beats Post Brexit Expectations Growth Reliant Infrastructure Delivery Say

Infrastructure and housing anticipated to drive growth as activity in the construction industry continues to climb at a quicker pace than initially expected following Brexit, new numbers suggest.

According to the latest predictions of the Construction Products Association (CPA), output is predicted to climb annually over the next two years – by 1.3 per cent in 2017, 1.2 per cent in 2018 and 2.3 per cent in 2019.

Infrastructure projects are likely to remain the industry’s main growth engine, powered by a strong National Infrastructure and Construction Pipeline valued at £300 billion over the next four years.

In particular, growth until 2019 is predicted to be predominantly driven by a 34.5 per cent increase in infrastructure activity due to big projects in the energy, rail and water sub-sectors, which would offset expected reductions in commercial and industrial development.

Home building is also anticipated to be an important source of development, with private house building starts rising by 7.2 per cent between 2017 and 2019, driven by a prolonged higher trend in house prices, demand from first-time buyers and the Help to Buy equity loans. In 2016, Help to Buy accounted for 39.8 per cent of new home sales in Q4 and has been an important government strategy for promoting building activity.

Heat Pumps

Noble Francis, economics director at the CPA said: “Construction output has been sustained post-referendum, primarily due to projects signed up to before June 2016. Private home, commercial, industrial, and infrastructure building are all predicted to be active in the first half of this year. If contract awards continue to decline as they did in the second half of last year, it’s likely that Brexit uncertainty will have the largest impact for industries like commercial offices and industrial factories, which require significant upfront investment in order to reap long-term rewards.

“We forecast that output in commercial offices will fall one per cent this year and a further 12 per cent in 2018. Industrial factory building is predicted to reduce five per cent in 2017 and 4.0 per cent in 2018. Infrastructure and private housing investment, on the other hand, are predicted to rise rapidly.

Large-scale projects like Hinkley Point C and High-Speed 2 are likely to have a significant impact on the growth of infrastructure construction in 2017 and 2018.

It’s expected that private house starts will climb by 3% in 2017 and by 2% in each of the following two years.

Given the reliance of construction industry growth on infrastructure and private housing sector activities, Francis said the government must prioritise the implementation of infrastructure projects in its National Infrastructure and Construction Pipeline going forward.

Because major house builders are dependent on the Help to Buy equity loans, which will expire in 2021, the government must define its intentions to maintain house building expansion as the program’s expiration date approaches.”

Last Updated on December 29, 2021


Author: Indra Gupta

Indra is an in-house writer with a love of Newcastle United and all things sustainable.

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