The construction industry’s output is expected to remain flat during 2018, according to Construction Products Association (CPA) forecasts.
A fall in public housing repair work is being blamed for the industry’s lack of growth, while the demise of construction giant Carillion is creating uncertainty around the delivery of a number of big infrastructure projects.
The CPA says any growth in construction this year will be reliant on the government’s delivery of these projects. If realised, this would result in a 6.3 per cent rise in infrastructure work. However, Carillion accounted for £850 million-worth of these projects and, with many of Carillion’s sites now on hiatus, the length of these delays will impact on the sector’s growth and on the 25,000-30,000 construction firms in the supply chain.
Growth is being forecast in private housing starts, which are expected to rise 2.0 per cent in both 2018 and 2019.
The sharpest decline for construction in 2018 will be in the commercial sector, with office construction expected to decline 15 per cent in 2018 and 10 per cent in 2019. There are concerns this will accelerate further if businesses choose to move operations out of the UK into other EU member states following Brexit negotiations.
Following the tragic fire at Grenfell Tower in June 2017, a further 160 social housing towers were deemed unsafe and in need of urgent work. However, the sector is suffering from a lack of finance available to local authorities and concerns over the capacity to deliver the work. The public housing repair, maintenance and improvement sector has fallen 20 per cent since 2010 and, despite the urgency following the Grenfell Tower fire, output is expected to fall by a further two per cent in 2018.
Noble Francis, economics director at the CPA, says: “Recent construction output and Markit/CIPS data have already highlighted subdued activity in the construction industry and our latest forecasts suggest that 2018 is likely to be tough for the industry. Overall, we are forecasting construction output to remain broadly flat this year but this is before the full impact of the liquidation of Carillion feeds through the supply chain. Government will need to take a key role in mitigating the effects as it has already done on the services part of Carillion.
“Infrastructure activity is still expected to grow by 6.3 per cent this year if politicians are able to deliver on their many announcements of major projects and spending across roads, rail and energy. Government will also need to help councils with funding to address issues on social housing towers above 18 metres since the Grenfell tragedy. Output in public housing repair, maintenance and improvement has already fallen each month since the tragedy and, without assistance, will fall two per cent this year.”
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