Construction forecast projects slowdown

Construction forecast projects slowdown

ARTICLE · By Timber Trade Federation · 23 Jan 2020

The Construction Products Association (CPA) has released its latest Construction Industry Forecasts for 2020/21. These figures can change quickly, however, and most members are reporting a positive, upbeat start to the year compared with the end of 2019.

The report paints a fairly depressing picture for the year, with forecast declines across most indicators. In total, Construction Output is forecast to fall 0.3% in 2020, and then rise 1.2% in 2021. The falls in construction reflect the medium-term uncertainty caused by Brexit as the implementation period currently only lasts until 31 December 2020. Private housing stats are forecasted to fall in 2020 by 2%. This continues a decline in private house building that had occurred since Summer 2019. With no clear sign of what will actually be agreed during the implementation period, it is difficult for investors and large firms to justify large up-front investments for a long-term rate of return in areas such as prime residential and commercial offices towers.

Public housing output forecast to rise

Public housing output offers a more positive story, despite the UK being thrown into a state of disarray by both Brexit and a general election. The reports estimated the value of public housing projects climbed by 10% last year to reach £6,150 million. For 2020 it is forecasting a further rise of 2% and a further 3% in 2021. This will be welcome news for the timber industry. However private housing output remains flat.

Overall construction output forecast

The forecast for construction output in 2020 has been revised downward from +0.5% in Autumn to -0.3% whilst the forecast for 2021 has been revised upwards from +0.9% to 1.2%. The downward revision to the 2020 forecast reflects the impacts of a slowdown in new contracts and starts on site towards the end of 2019. The upward revision to construction output in 2021 reflects marginally improved prospects due to a catch-up in activity.

The CPA have also released a Brexit update for January, which details the most likely scenarios that could occur once the Withdrawal Agreement has been passed through Parliament and the potential consequences of a No Deal Brexit after the 31 December 2020.

You can also read the TTF’s publications on Brexit, such as our Brexit Guide and our latest article on Brexit from our CEO, Dave Hopkins.

Make sure to join us at the UK Softwood Conference on 4 March 2020 where our key note speaker, CPA economic director, Noble Francis, can talk through the construction forecast in greater detail.