Hinkley Point at sunset (EDF)

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Brexit set to trigger chaotic patterns of boom and bust over next year

21 January 2019 | By GCR staff | 0 Comments

UK industry body the Construction Products Association (CPA) has slashed its forecast for the sector’s revenue growth in 2019 as uncertainty intensifies over how the Brexit debacle will end.

Six months ago, the CPA predicted that output would increase by 2.3%. Now, its Winter Forecasts foresees activity rising by 0.3%.

The headline figure hides wide differences in the prospects of individual sectors.

Despite the gloom, some sectors are expected to boom, with infrastructure being the star performer. The CPA says output will rise 8.8% in 2019 and 7.7% in 2020 thanks to megaschemes such as the High Speed 2 rail link, the Thames Tideway sewer tunnel and Hinkley Point C nuclear power station.

When it comes to harbours, Brexit may actually trigger frenzied activity: growth of 12% is expected in 2019 and 10% in 2020 “and could be higher if works on improvements and expansions of ports need to be carried out”.

Private housebuilding is also expected to buck the trend, with activity rising to 2% in 2019 and 1% in 2020.

The main victims are expected to be the commercial sector, particularly offices. Here, output is expected to fall 20% in 2019.

Noble Francis, economics director at the CPA, said: “Our latest construction forecasts are conditional on either a revised Brexit withdrawal being agreed with the EU and getting through UK parliament, or a delay to Article 50.

“However, even if this occurs, the uncertainty surrounding Brexit is clearly affecting the construction industry in areas that require high investment up front for a long-term rate of return such as commercial offices.

“The construction of prime residential apartments and industrial factories is also being affected greatly by the high and rising Brexit uncertainty. However, although this uncertainty adversely affects some construction sectors, it provides a boost to others. The warehouses and harbours are relatively small sub-sectors but both are growing rapidly and are expected to enjoy double-digit growth this year as the demand rises for storage and trading facilities.”

Image: Hinkley Point at sunset (EDF)

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