Home News Growth continues despite public housing slowdown and skills shortage

Specfinish SF News icon2

Output in the construction industry is forecast to grow by 21.7% between 2015 and 2019, providing an additional £26.9 billion of economic activity to the UK economy, driven by both private and public sector construction according to the latest Construction Product’s Association (CPA) construction forecast.

A sharp fall in public housing, however, is expected to hinder short-term growth whilst significant investment in building a skilled workforce will be needed to support construction in the medium-term.

Total construction output is forecast to rise 4.9% in 2015, 4.2% in 2016 and 3.5% in 2017 with private house building anticipated to rise 9.0% in 2015, 5.5% in 2016 and 3.5% in 2017. However public house building is forecast to fall 10.0% in 2015, 5.0% in 2016 and remain flat in 2017.

The CPA points out that the lack of skilled labour is a key risk. Employment in the UK construction industry is now 390,000 lower than at its 2008 peak. So far, the lack of skilled labour has primarily affected the house building sector. As the wider industry activity picks up, however, this issue is likely to spread across the industry. In the short-term, it is already putting upward pressure on costs. In the medium-term, the forecast growth will not be possible without significant investment in skills.

Dr Noble Francis, the CPA’s economics director, said: “Prospects for the construction industry are very bright. Construction output is forecast to increase 4.9% in 2015 – almost double the rate of growth for the UK economy as a whole – and 21.7% overall by 2019. This growth will mainly be driven by an increase in work across the private housing and infrastructure sectors.

“Private house building is forecast to rise 9.0% in 2015 and 5.5% in 2016 as it benefits from a strong property market supported by rising real wages, increased mortgage availability and government policies such as Help to Buy. However, public house building activity is expected to fall sharply – 10% in 2015 and 5.0% in 2016 – due to the negative impact of cuts to social rents and the extension of Right to Buy on housing association funding.”