Construction output expected to remain flat in 2018

A tough year is expected for the UK's construction firms, as output is expected to remain flat throughout 2018, according to the Construction Products Association.

Following on from the insolvency of Carillion, a drop in public housing repair work has also been noted which will further impact the sector.

It comes despite the need for numerous urgent projects following the Grenfell fire, as a number of works are required to bring buildings up to required safety standards.

A number of infrastructure projects are in the pipeline and could provide a 6.3% boost to work in the next 12 months, but they are reliant on government delivery.

However, some £850 million of infrastructure projects were the responsibility of Carillion and it is not yet known if they will be delayed or scrapped as a result of the construction giant's insolvency.

The CPA has suggested that the largest impacts will be noted in the commercial sector, as office building has plummeted amid uncertainty surrounding Brexit.

Office construction is anticipated to decline at a rate of 15% throughout the current year, and 10% in 2019, although these figures could be conservative estimates if firms opt to move their operations out of the UK following Brexit.

The trade body's findings echo those of the latest Markit/CIPS construction surveys that also pinpoint difficult times for the sector.

CPA Economics director Noble Francis has said he expects output ''to remain broadly flat'' and said the government will be key to mitigating the full impacts of the collapse of Carillion.

Plans for road, rail and energy investment mean infrastructure activity is expected to grow although drops in output elsewhere will mitigate that.

The CPA represents key manufacturers and distributers of construction materials and has suggested the sector is worth more than £55 billion annually.

However, for construction firms with concerns over their finances it is important they assess their options, as it may be possible to agree improved payment terms, tackle late payments or overcome contractor failure.

The key is to act quickly, as the number of potential and financial and insolvency outcomes at their disposal will likely be higher

By Phil Smith


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