UK Construction activity is expected to remain "broadly flat" over the next to years following the EU referendum, according to the Construction Products Association (CPA).

In its latest construction forecasts, the organisation is predicting output to rise 0.6% this year, 0.3% in 2017 and 0.2% in 2018.

In addition, factory construction work is anticipated to decline 5% this year and a further 2% in 2017, while private housing starts will increase 2% in 2016, remain flat in 2017 and fall 2% in 2018.

While office construction is forecasted to rise 8% this year, before falling 3% in 2017 and 10% in 2018, infrastructure work is expected to rise by 6.2% in 2017 and 10.2% in 2018.

Noble Francis, Economics Director, said in the second half of 2017 there is likely to be a "clear division" between privately-funded construction sectors and publicly-funded/in regulated sectors that are largely unaffected by post-referendum uncertainty, such as infrastructure and education.


"Surveys across the industry highlight that activity in the construction sector has been sustained post-referendum, primarily based upon work on projects that were signed in the 12-18 months before the referendum," he said.

"Looking forward, projects in the pipeline mean that construction activity is likely to continue throughout the rest of 2016 and the first half of 2017.

"In construction sectors that are likely to be affected by the uncertainty, new investment has already fallen sharply but the lag between new contract awards and activity on the ground means that the weakening in sector output is likely to occur from the second half of next year. Commercial offices output is expected to decline 3.0% in 2017 and a further 10.0% in 2018. In the industrial factories sector, construction is expected to fall 11.6% between 2015 and 2018 as renewal and refurbishment of existing factories continues but large manufacturers make fewer new major investments.

"Within sectors that are expected to be largely unaffected by uncertainty, infrastructure will be a key driver of construction activity. Major projects such as HS2, Hinkley Point C nuclear power station and the Thames Tideway Tunnel are anticipated to provide growth of 6.2% in 2017 and 10.2% in 2018. Within education construction, activity is expected to rise 5.8% by 2018 due to public sector capital investment in the Priority School Building Programme and private sector investment in universities, including £1 billion programmes at Manchester, Cambridge and Glasgow.

"With an upcoming Autumn Statement, it is vital that the Chancellor focuses on reducing uncertainty for the private sector, sustaining the housing sector and ensuring delivery of education construction and major infrastructure projects already in the pipeline."

(LM/MH)