Industry predicts falling UK construction output over next two years

Credit agency Experian cut its previously-predicted growth rates to 3%, down from 6%, in 2016 and 10%, down from 18%, in 2017 according to Building Magazine, while earlier this week the Construction Products Association revised its construction growth estimates down to 4% in 2016 and 3.4% in 2017. Both groups are now predicting that output will grow by 5.5% this year.

Experian said that its revised forecasts were largely due to previously "optimistic" predictions of activity related to the UK's National Infrastructure Plan (NIP), which would be exacerbated by a sharp fall in public housing activity. According to the CPA, private housebuilding activity will increase modestly in 2016 and 2017, but at a lower rate than would have been anticipated without "uncertainty regarding government policy", according to the trade body's economics director, Noble Francis.

"Construction output is forecast to increase 5.5% in 2015, which is more than double the rate of growth for the UK economy, due to growth in the three key sectors of construction: private housing, commercial and infrastructure," Francis said.

"Over the following two years, however, construction output is forecast to be adversely affected by the UK's most uncertain election in more than 40 years. The lag between construction contracts and work on the ground means that construction activity in 2015 probably won't be impacted, since the majority of work for the year has already been planned. Instead, we expect a break in private and public investment this year for future projects, which in turn will lead to slower construction growth of 4.0% in 2016 and 3.4% in 2017," he said.