Home News Output to fall 14.5 % in 2020 as construction faces crucial winter...

The Construction Products Association’s (CPA) has forecast that construction output will fall 14.5% in 2020 and, according to its latest scenarios, the CPA sees a crucial winter ahead for construction .

Demand for new private housing and private housing repair, maintenance and improvement, as well as strong growth in the infrastructure sector, are expected to support recovery for the industry towards the end of this year and into the next following historic falls in output during lockdown. The prospects, however, of both a deterioration in labour market conditions along with a potential ‘No Deal’ Brexit deal at the end of December mean that the upcoming winter will be decisive for how far such a recovery can be sustained.

The CPA’s Autumn Scenarios expect a tick-shaped economic recovery as the most likely outcome, with output for construction rising by 13.5% in 2021 from the sharpest fall on record in 2020. The easing of lockdown measures over the summer was accompanied by a rush to meet pent-up demand, particularly in private housing and refurbishment work that couldn’t take place as sites were closed. With social distancing integrated on construction sites, productivity has started to improve.

The CPA says the housing market has received a boost as pent-up demand sees transactions being brought forward by both the stamp duty holiday and the end of the first phase of Help to Buy in March 2021. Equally, private housing RM&I has benefitted from the boom in home working and greater spending on home improvements. Some caution remains as demand may change once the stamp duty holiday ends in Q2 2021 and uncertainty in the employment market eases demand.

The CPA expects the infrastructure sector to be critical for growth. With output not falling as sharply this year as in other sectors due to larger sites making social distancing easier, next year’s growth will capture the start of main works on HS2, plus ongoing work on major projects such as offshore wind, Thames Tideway and Hinkley Point C. Only airports within the infrastructure sector are expected to see a decline in activity over the next few years, given sharp declines in airline passenger numbers as a result of the pandemic.

Noble Francis, the CPA’s economics director, said: “The easing of the social distancing restrictions in summer led to a sharp recovery in certain sectors of the construction. The government’s commitment to infrastructure is also a promising sign of growth.

“But, uncertainty continues to loom for the commercial sector. If working from home becomes more engrained in society, footfall in city and town centres will decline leading to a lack of demand for office and retail space. Equally, a critical winter lies ahead for the wider economy. The key risks to the construction industry remain a potential second national lockdown and a ‘No Deal’ Brexit.

“Construction recovery so far has been highly reliant on government (and it) has an extra responsibility, therefore, to deliver on its announcements and ensure construction recovery does not stall in the next 12 months. We certainly aren’t out of the woods yet.”


Leave a Reply