Brexit remains key factor in construction contractor market forecast

Brexit Remains Key Factor in Construction Contractor Market Forecast

Brexit remains a key factor influencing the forecast with the continued uncertainty impacting expansion plans for businesses as well as consumer spending and confidence. This lack of clarity about the future of the UK outside the EU is beginning to have more marked implications for the construction sector particularly in the form of deferred investment levels.

The construction industry continues to face acute labour shortages in specific areas – notably trades such as scaffolding, bricklaying, roofing, carpentry, plastering and plant operatives. In addition, there is an increased demand for non-construction professional, technical, IT, and other office–based staff and a high demand for construction managers and project managers.

With over £12bn worth of schemes with detailed planning, the commercial office sub-sector is expected to account for around 10% of the total value of projects in the forward pipeline (£12bn), driven by continued demand for space which still outstrips supply. Whilst demand in London from traditional occupiers such as the finance sector has declined, other major cities are seeing increased demand and are expected to represent an increasing share of the forward pipeline

London represents around 23% of the total planning pipeline in terms of value (£29bn), with key sectors of activity expected to be focussed in the commercial office sector (namely TMT, professional and business services) and in the entertainment & leisure sector (namely hotels). The regions of London expected to see the highest activity include in the City, Westminster, Stratford, Tower Hamlets and Wembley areas. Key sectors are expected to include commercial office, infrastructure and residential

Growth is forecast to reduce to around 2% for 2019-20 and increase to 3% annual growth rate to 2024 when total construction output is forecast to be around £195.8bn. The forecast has been amended to take into account the recent review of construction data carried out by ONS and the uncertainty surrounding the future trading position of the UK, which is reflected in the steady, if modest, annual output growth levels to 2024.

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