How Construction Spending on Infrastructure Will Offset The Brexit Effect

A number of major construction industry forecasts suggest strong growth in the UK’s infrastructure spending in the coming years. It is hoped that this would mitigate the faltering commercial industry which is predicted to worsen as the effects of Brexit take its toll.

New reports indicate that this influx of monies into the sector could result in a post-Brexit growth of between 0.2% and 0.3%. A sharp deviation from the predicted 3.6% growth before the referendum.

Figures from the CPA suggest that a majority of the industry activity in the interim are being sustained by the work on projects that were agreed on or started before the referendum.

The construction forecast posits

  • Construction output to rise 0.6% in 2016, 0.3% in 2017 and 0.2% in 2018
  • Offices construction to increase 8% in 2016 before falling 3% in 2017 and a further 10% in 2018
  • Factories construction to fall 5% in 2016 and 2% in 2017
  • Infrastructure work to rise by 6.2% in 2017 and 10.2% in 2018
  • Private housing starts to rise 2% but remain flat in 2017 and fall 2% in 2018
  • Retail construction to fall 8.0% in 2016 before falls of 4% in 2017 and 2% in 2018

This implies continued activity in the industry for the first half of next year. The second half though, does not bode well for privately funded construction sectors who are poised to suffer more from the uncertainty of the current times.

Noble Francis, the economics director at the CPA predicts that industrial construction outputs could fall as much as 11% by 2018. This he argues is because large players in the industry would likely make fewer major investments as a result of the economic uncertainty that has gripped the industry.

Reports indicate that it is vital that the Chancellor, for the upcoming autumn statement, focuses on reducing uncertainty for the private sector and ensure the delivery of projects that are already in the pipeline if the industry is to survive the times.


Latest Issue

BDC 305 Jun 2023