UK growth forecast for next few years

A 13.2% increase in UK construction output by 2017 is being forecast, with private house building expected to be a key driver of this growth.

The latest forecasts from the UK’s Construction Products Association also predict a sharp fall in public housing, which is expected to hinder short-term growth, while it said significant investment in building a skilled workforce would be needed to support construction in the medium-term.

The Construction Products Association forecast that total construction output would rise 4.9% in 2015, 4.2% in 2016 and 3.5% in 2017.

Private house building was expected to rise 9.0% in 2015, 5.5% in 2016 and 3.5% in 2017.

Public house building, however, was forecast to fall 10.0% in 2015, 5.0% in 2016 and remain flat in 2017.

Infrastructure output was predicted to rise 10.3% in 2015, 10.8% in 2016 and 10.4% in 2017.

Dr Noble Francis, economics director, said, “Prospects for the construction industry are very bright. Construction output is forecast to increase 4.9% in 2015 – almost double the rate of growth for the UK economy as a whole – and 21.7% overall by 2019.

“This growth will mainly be driven by an increase in work across the private housing and infrastructure sectors.

He added that infrastructure was forecast to be one of the key drivers of construction growth over the next five years.

“The government has a National Infrastructure Plan in place with a pipeline of projects across the UK worth £411 billion (€562.26 billion). As a consequence, we forecast that infrastructure output will experience double-digit growth each year to the end of our forecast horizon in 2019.

“It’s not all good news, however, as yet again we expect delays until 2018 for the main works on the nuclear power station Hinkley Point C.”

He also said that as a result of concerns over planning and financing, it did not foresee main works starting on the HS2 (High Speed Two rail line) before 2020.

Dr Francis said, “Our forecast growth of 21.7% by 2019 for construction has raised a key risk regarding the lack of skilled labour. Employment in the UK construction industry is now 390,000 lower than at its 2008 peak. So far, the lack of skilled labour has primarily affected the house building sector.

“As the wider industry activity picks up, however, this issue is likely to spread across the industry. In the short term, it is already putting upward pressure on costs. In the medium term, the forecast growth will not be possible without significant investment in skills.”