By Experian Economics2019-01-14T12:49:00
Construction output is rising, driven largely by housing, both public and private, but public work is slipping – and the offices market is likely to be hit hardest by Brexit
The latest figures released by the Office for National Statistics showed UK GDP increased by 0.6% in the third quarter of 2018. This was in line with market expectations and represents a 1.5% rise compared with the same quarter the previous year. The strong performance of the past four years means the UK economy has recovered ground lost during the 2007/08 recession more quickly than seemed likely a few years ago. But the repercussions of the recession and the Brexit vote are set to hamper economic progress for a few years. The pace of expansion is likely to be well below the long-term trend throughout 2018-22, with GDP growth averaging 1.6% a year, against 2.6% from 1981 to 2008.
Between July and September 2018 total construction output increased by 2% to £41.56bn (in 2016 prices) compared with the same period in 2017. The public housing market contributed with a 3% rise to £1.64bn. The sector is expected to grow by an annual average of 7% over the next three years. Recent budget announcements of increased funding for social and affordable housing should boost both public and private housebuilding but growth is likely to be held back initially by the uncertainties around Brexit. The announcement of the removal of the local authority borrowing cap could prove a game-changer, bringing growth in public housing output to double-digit levels by 2021.
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