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Wed September 18 2019

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Forecasts show construction growth to slow – or worse…

25 Feb Latest forecasts published by the Construction Industry Training Board (CITB) predict that, assuming a Brexit deal is struck with the EU, construction output in the UK will grow by an average of 1.3% a year over the next four years.

The infrastructure sector is expected to be in reverse gear by 2023
The infrastructure sector is expected to be in reverse gear by 2023

The CITB/Experian forecasts predict that there will be a 3% growth in UK construction output next year, followed by 1% growth in 2021 and 2022, before slowing further to zero growth in 2023.

Strikingly the forecasts show 9% growth in infrastructure output for 2019, slowing to 4% next year, followed by no growth in 2021 or 2022 and minus 3% in 2023. The sector has been heavily affected by Brexit uncertainty and by investors stalling construction of nuclear power plants, CITB says.

All of this is predicated on the assumption that the government will secure parliamentary support for a Brexit withdrawal agreement. If there is a ‘no deal’ Brexit, it will be back to the drawing board for the economists.

“If we exit the EU without a deal in place we’ll have to readjust our forecast based on the better information we’ll have at the time,” the CITB said.

The forecasts are contained within the 2019 Construction Skills Network (CSN) report – a five-year forecast into the industry’s skills needs.

The biggest increase is expected in public housing, which is pulling ahead as infrastructure slows. Financial support from government at both local and national levels is encouraging a 3.2% growth rate in public housing, up half a percent since last year’s forecast.

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Commercial construction is significantly declining due to investors taking a cautious stance in the face of Brexit. The forecast expects the sector to drop sharply this year then level out by 2023, with zero growth anticipated overall.

Despite the wider economic uncertainty, CITB estimates that approximately 168,500 construction jobs are to be created in Great Britain over the next five years, which is 10,000 more than in last year’s forecast. Construction employment is expected to reach 2.79 million in 2023, just 2% lower than its peak in 2008.

CITB policy director Steve Radley said: “This forecast aptly reflects the uncertainty, particularly associated with Brexit, that we’re seeing across the wider economy. Currently, concerns around Brexit are weighing on clients and investors, creating a knock-on effect on contractors and their ability to plan ahead.

“However, assuming that a deal is agreed, we expect low but positive growth for construction. Even as infrastructure slows, sectors like public housing and R&M are strengthening. This will see the number of construction jobs increase over the next five years, creating growing opportunities for careers in construction and increasing the importance of tackling the skills pressures we face.”

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