2021 workload rebound but to 6.4% below pre-Covid level

Aaron Morby 2 months ago
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Construction forecasters are predicting a V-shaped rebound in workloads next year after a 21% slump this year.

Construction activity expected to rebound 18% next year after 21% fall in 2020
Construction activity expected to rebound 18% next year after 21% fall in 2020

They have upgraded forecasts for workloads after activity on-site resumed slightly quicker than initially expected post-lockdown.

In its latest construction forecast, the Construction Products Association is betting on a V-shaped rather than W or U-shaped recovery for the industry.

The worst affected sectors this year will be private housing (-33%) and commercial (-29%).

But while workloads are expected to rebound to a certain extent, industry crystal-ball gazers are concerned about longer term confidence in the wider economy and fresh structural changes around shopping and work habits impacting the commercial sector.

This has seen them downgrade the extent of recovery next year to 18% leaving construction workloads lagging pre-Covid levels.

CPA’s Economics Director, Noble Francis, said: “The quicker-than-expected return to sites is certainly a positive sign, and evidence of the CPA’s main scenario of a ‘tick’ shape sharp recession and recovery, with coronavirus a temporary issue primarily affecting economic activity in the first half of 2020.

“When social distancing eased in mid-May, sustained UK economic recovery from June was enabled as services that involve person-to-person interaction gradually opened.

“There still remains a significant number of long term uncertainties for the UK economy though, including: unemployment rates as furlough comes to an end, the uptake of homeworking, the potential of a second wave of infection, and, of course, the end of the Brexit implementation period in December.

“While government plans for a £2bn Green Homes Grant is welcome news for the industry, the key will be in the delivery of this policy, ensuring it provides long-term, patient finance rather than being spent quickly and thoughtlessly.

“While next year we anticipate construction output rising 18% overall, it is worth noting that this is compared with a low base of activity in 2020 and will still be 6.4% lower than pre-coronavirus levels.

“The delivery of major infrastructure projects will be crucial to growth in 2021, with activity on site less affected by social distancing and major projects like HS2 driving significant growth for the sector.

“As such, the ‘New Deal’ will have little impact on boosting construction activity beyond what was already expected.

“While measures in the Chancellor’s recent Summer Statement could potentially have a significant impact on construction, the extent of this is still unclear given the lack of new funding and a lack of clear strategy on the implementation of the £2bn Green Homes Grant.”

 

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