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Construction growth forecast slashed

14 Dec 16 Market research firm Leading Edge has substantially downgraded its expectations for construction output next year.

Leading Edge director Mel Budd
Leading Edge director Mel Budd

Leading Edge now forecasts that total GB construction output volume in 2017 will grow by 1.3% compared to 2016. This would take total output to £136.4bn in 2017, at 2013 prices.

Since its previous forecast in March 2016, Leading Edge has downgraded its expectations for 2017 from 3.5% growth to 1.3%, a cut of around £3.5bn on total output. This is due to a predicted slowdown in the overall economy and uncertainties surrounding Brexit.

Leading Edge expects 2016 full year figures to be flat, showing little or no growth on 2015.

Mel Budd, director at Leading Edge, said: “The latest government figures on new orders for Q3, the first full quarter post Brexit, showed growth of 5.5% on the previous year although it was down on Q2 by 2.4%. Although new orders do not always result in actual output, the year on year growth is a good sign and in particular infrastructure is looking like it will deliver growth next year.”

Leading Edge forecasts that total construction output in 2020 will be 8% higher than 2016 after excluding the effects of inflation. Infrastructure will be a key growth area, with the government’s autumn statement announcements boosting output.

“Although the GDP forecasts for the UK have recently been downgraded, the UK economy is still relatively sound and GDP forecast growth is similar to the Euro zone where expectations are 1.5% for 2017 and 1.7% for 2018,” Mr Budd said. “However, there are downside risks for UK construction, relating mainly to Brexit and international factors, although we haven’t yet seen any significant reductions in activity.”

Source: Leading Edge

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