Construction Industry Outlook for 2019

Construction Industry Outlook for 2019

01st January 2019

A Happy New Year to all of our readers!

As the brand new year begins, here at Safety Fabrications we’re going to take a look at some of the predictions for the construction industry in 2019.  Why not follow us throughout the year on Facebook and Twitter to keep up to date with all the news and developments that affect the construction sector here in the UK?

After falling by 6% over the past year, project starts are predicted to decline by a further 2% here in the UK before recovering by 3% in 2020.  This means that overall starts will remain in decline for a third consecutive year in 2019 before beginning a modest recovery next year.  However, it’s vital to remember that this outlook is dependent on the achievement of a Brexit agreement and the planned transition period.  A no-deal Brexit is likely to have a negative impact on the UK economy and construction activity over the coming year and into the future.

With infrastructure sector projects remaining a key driver of growth for the construction sector as a whole, output is forecast to reach a historic high of £23 billion by 2020 thanks to HS2 and Hinkle Point C.  This will be tempered by the delays and cost overruns on the Crossrail project which has led some economists to warn that other major projects may not be delivered without similar cost overruns and delays.

Continuing uncertainty over a no-deal Brexit has already impacted new orders in construction sectors dependent on international investment for a long term rate of return.  These include the construction of prime residential premises in London, industries factories and commercial office towers, with construction output in these sectors already expected to decline sharply during the coming twelve months.  If the government manages to reduce the uncertainty, this is likely to improve the delivery of major projects both in terms of time and budget.

With the construction industry divided into three major sectors (housing, infrastructure, and non-residential buildings), construction has become a “tale of three sectors”, all of which perform differently.  The best performer is likely to be infrastructure, thanks to the mega projects involved while the non-residential building sector is likely to struggle over the next year.  Housing is predicted to remain pretty much the same as 2018, as social house building has increased as government initiatives designed to boost this sector come into play.  When it comes to private house building, this is likely to continue to increase modestly, despite a quieter housing market, if the economy keeps growing.

More negative news comes as Brexit approaches with industry leaders warning that increasing the training of UK citizens in order to replace EU workers post Brexit is unlikely to be enough to tackle the skills shortage. 

We are living in uncertain times, both politically and economically.  It’s also the case that the construction industry as a whole has seen some sweeping changes in recent year, thanks mostly to developments in both digital technology and new materials being developed.  We’ll be keeping a close eye on all the news that is likely to impact the construction industry in the UK over the coming year, so stay with us for an exciting ride ahead.