Construction output in the second quarter of 2018 rose by 1% compared with last year, but most sectors seem to be feeling the growing uncertainty around Brexit
UK GDP increased by 0.4% in the second quarter of 2018 – 1.3% up on the same quarter last year. The economy has recovered some ground since the recession but Brexit is set to hamper economic progress, with GDP growth expected to average 1.6% per year in 2018-22, compared with 2.6% in 1981-2008.
Between April and June 2018 total construction output rose by 1% to £40.87bn (in 2016 prices) compared with the same period in 2017. The public housing market contributed to this with a 3% rise to £1.6bn over the same period. The sector is expected to grow by 3% a year over the next three years. While recent plans to encourage council housebuilding will boost output, the fall in business investment triggered by the uncertainties around Brexit will affect social housing providers’ ability to raise finance. We expect no change in 2018, with moderate recovery in 2019 and 2020.
The private housing sector posted the second strongest year-on-year growth (after the industrial sector), rising 6% to £8.84bn. The sector is expected to continue growing, albeit at a slower rate of 3% per annum. Given the uncertainty ahead, output growth will see some softening. Meanwhile, affordability issues and uncertainty continue to dampen demand, and we expect a slowdown in 2018 from the double-digit rises seen over the past five years, picking up only slightly by 2020.
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