UK defies Brexit fears

Activity in the UK’s construction industry is rising more quickly than expected following the EU referendum, according to the spring forecasts published by the Construction Products Association (CPA) for the period between 2017 and 2019.

Construction output is forecast to rise by 1.3% in 2017, 1.2% in 2018 and 2.3% in 2019.

While these figures might suggest resilience in the face of Brexit-related anxieties, they mask a significant difference in activity across the key construction sectors.

Growth is believed to rely heavily on infrastructure projects, driven by a strong National Infrastructure & Construction Pipeline valued at £300 billion (€356 billion) over the next four years.

It has been forecast that output in commercial offices will fall by 1.0% in 2017 and a further 12.0% in 2018, and the construction of industrial factories will drop by 5.0% in 2017 and 4.0% in 2018. But the CPA said this should be offset by a 34.5% increase in infrastructure activity fuelled by major projects in the energy, rail and water sub-sectors, such as the main works at Hinkley Point C and High-Speed 2.

This, it said, would be a primary driver of growth between 2017 and 2019.

Another key source of growth is expected to be house building, with private house building starts rising by 7.2% between 2017 and 2019. In 2016, the government’s Help to Buy policy significantly supported building activity, accounting for 39.8% of new home sales in the fourth quarter.

Noble Francis, economics director at the CPA, said, “Looking forward, given the dependence of construction industry growth on activity in the infrastructure and private housing sectors, it is essential that government focuses on delivery of infrastructure projects in its National Infrastructure & Construction Pipeline.

“In addition, as major house builders are reliant upon Help to Buy equity loans, which are due to end in 2021, it is vital that government outlines its plans early to support house building growth as we approach the end of the scheme.”

The recently published findings of the CPA’s State of Trade Survey also gave reason to be optimistic, while emphasising how important it is for the government to provide greater certainty.