Construction output is anticipated to fall by 14.5% in 2020, forecast CPA

Construction output is anticipated to fall by 14.5% in 2020, forecast CPA

ARTICLE · By TTF · 23 October 2020

The latest CPA Construction Industry Scenarios (Autumn 2020) find that construction output is anticipated to fall by 14.5% overall in 2020 before rising by 13.5% in 2021.

The Autumn estimate for construction output contraction in 2020 would be the largest fall in construction output on record.

Output in 2020 Q2 was 36.1% lower than in 2019 Q4, prior to the social distancing restrictions, and 36.8% lower than the 2019 Q1 construction output peak. However, the overall figure for 2020 represents an upward revision to the CPA’s Autumn Main Scenario compared with Summer due to the rapid return to site for existing projects and pent-up demand for housing and refurbishment work as well as social distancing and other safety measures easing and, consequently, being less of an hindrance to productivity on site than previously assumed.

The largest falls in activity are industrial (-22.1%) and private housing (-20.7%). The least affected sectors are anticipated to be infrastructure (-3.0%) and public nonhousing (-8.5%).

Construction output is forecasted to grow by 14% in 2021, 3% lower than in 2019, pre-coronavirus. The largest growth rates are expected to be in infrastructure (31.4%), public housing rm&i (28.1%) and private housing rm&i (14.3%).

Brexit

The CPA’s latest Brexit report estimates that a Free Trade Agreement at the top level is still the most likely option despite the rhetoric and lack of time and this is still the default assumption in the CPA main scenario but there is still an approximate 40% chance of a ‘No Deal’ Hard Brexit.

A ‘No Deal’ scenario leads to UK GDP in 2021 Q1 being an estimated 3.5% lower than in the main scenario and construction output in 2021 being an estimated 6% lower than in the main scenario whilst the UK is still recovering from the impacts of the 2020 H1 recession

If there were to be a ‘No Deal’ Brexit, the largest impacts would be in the first quarter of 2021 as the UK deals with initial admin delays, cost rises and trade burdens.

We would like to remind all members to make use of all of our Brexit resources via our dedicated Brexit page.

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