{"id":12417,"date":"2023-01-30T04:47:04","date_gmt":"2023-01-30T12:47:04","guid":{"rendered":"https:\/\/essential.construction\/news\/construction-forecast-to-fall-by-nearly-5-this-year\/"},"modified":"2023-01-30T04:47:05","modified_gmt":"2023-01-30T12:47:05","slug":"construction-forecast-to-fall-by-nearly-5-this-year","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/construction-forecast-to-fall-by-nearly-5-this-year\/","title":{"rendered":"Construction forecast to fall by nearly 5% this year"},"content":{"rendered":"

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The big downward revision from -0.4% forecast just last summer and -3.9% forecast in the autumn is mainly due to the impact of a wider economic recession, rising interest rates and inflation.<\/p>\n

Two of the three largest sectors of activity, private housing new build and housing repair, maintenance and improvement, are forecast to be the worst affected this year.<\/p>\n

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Falls in activity in these areas are expected to be partially offset by continued growth in infrastructure, the second largest sector, which is already at historic high levels of activity.<\/p>\n

Even here, however, there is growing concern over the impact of double-digit construction cost inflation. Given financial constraints for government, this means the industry will see the value of activity expected previously, but not the volume.<\/p>\n

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Key points<\/h3>\n\n

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\u2022 Construction output falls by 4.7% in 2023 before growth of 0.6% in 2024<\/p>\n

\u2022 Industrial output up 2.3% in 2023 before falling by 4.6% in 2024<\/p>\n

\u2022 Infrastructure output to increase 2.4% in 2023 and 2.5% in 2024<\/p>\n

\u2022 Private housing output falls by 11.0% in 2023 and by 1.0% in 2024<\/p>\n

\u2022 Private housing RMI to fall by 9.0% this year before 1.0% rise in 2024<\/p>\n<\/div>\n

Even anticipating a soft landing for housing in the spring, forecasters predict private housing output this year will experience an 11% fall as house builders focus on completing existing developments rather than starting new sites.<\/p>\n

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Further growth in infrastructure output is expected but it is likely to be slower than in previous years due to cost inflation and financial constraints.<\/p>\n

The Chancellor stated clearly in the Autumn Statement that capital expenditure would be maintained in cash terms. In the near-term, this is likely to mean that current central government projects go over budget given double-digit construction cost inflation.<\/p>\n

But CPA Economics Director Noble Francis warned there would be hesitancy from the public sector signing up to new projects due to uncertainty over costs spiralling further.<\/p>\n

He said that in addition, financially constrained councils were likely to cut spending on new projects to cover the rising costs of essential repairs and maintenance.<\/p>\n

In the medium-term, projects towards the end of the government\u2019s Spending Review are expected to be pushed back into the next review period due to budgetary constraints. After 4.9% growth in 2022, infrastructure output is forecast to rise by 2.4% in 2023 and 2.5% in 2024.<\/p>\n

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