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Construction growth slows following Brexit

Construction growth slowdown

The construction industry is facing a slowdown in growth after the Brexit vote, according to the latest report from the Construction Industry Training Board (CITB).

The Construction Skills Network Report released today (8 November) shows that the sector’s expected average output over the next five years has been downgraded from 2.5% – which was forecast in January – to 2%.

Although the rest of 2016 and 2017 will see limited growth and a small contraction of -0.2%, the employment growth rate has been revised down as the UK’s recruitment requirement has fallen by a third, from 232,000 to 157,000.

“Our new figures reflect the increased uncertainty in a Brexit-facing world. While construction’s slowdown cannot be solely attributed to the result of the vote, it has certainly intensified and hastened any decline in growth,” said CITB’s director of policy Stephen Radley.

“Recently, trading conditions have become more difficult, and margins are being further squeezed. But Brexit has introduced an unprecedented number of unknowns and construction is beginning to feel the repercussions.”

While the UK’s average output is 2%, regionally the outcome is varied with Wales showing the strongest growth at 5.7% while Scotland is predicted to contract at -0.6%.

Greater London shows the biggest change, falling two percentage points from January’s forecast of 3.5% to 1.5% currently.

Infrastructure output is a key driver of the forecast, with Hinkley Point C boosting the figures. However, even this is likely to contract more than anticipated largely due to a pause in road building and weak performance in the electricity sub sector.

Although further project cancellations are not expected, slippage may also affect the forecast for the next five years.

“While on the whole the outlook has worsened, we do need to keep some perspective,” added Radley.

“The economy is bearing up reasonably well in the wake of the uncertainty and construction has a healthy programme of major projects and infrastructure works in the pipeline. Projects such as Hinkley, Wylfa and HS2 will undoubtedly buoy up the sector in the medium term.”

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