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Double digit growth estimated for construction in 2021

Construction activity has continued to grow throughout the first quarter of 2021 as it recovers from the impact of COVID-19, and is expected to hit double figure growth this year according to the Construction Product Association.

The CPA forecasts that it will be next year before the industry recovers the output lost in 2020 to return to 2019 levels.

However, the forecast also highlights the risks to the construction industry’s recovery which includes supply constraints for key imported construction products, and the concern around demand for housing, new builds, and repair, maintenance and improvement works and commercial space.

Construction output is forecast to increase by 12.9% in 2021, and 5.2% in 2022 compared with 14% in 2021 and 4.9% in 2022 CPA’s winter main scenario.

The downward revision to the growth forecast for 2021 reflects a higher base for construction output in 2020, with official data reporting a smaller fall than anticipated of 12.5% in 2020 compared to 2019.

Infrastructure was least affected by the initial lockdown as it was easier to operate procedures and other safety measures on large sites. Over the next year, output is set to rise by 29.3%, touching its highest level on record.

Driven by the activity on major prospects such as HS2, as well as activity on long-term frameworks in regulated sectors such as water, roads, electricity and broadband.

Extensions to the stamp duty holiday, Help to Buy and job support schemes are expected to help support demand in private housing and private housing rm&i in 2021.

Commenting on the Spring Forecast, CPA Economics Director Noble Francis, said: “Whilst outlook is largely positive, the recovery in commercial – the third-largest construction sector – is expected to be muted given a lack of major investment in new projects, particularly in Central London.

“More notably, however, there are significant risks to the recovery in the form of supply constraints in terms of extended lead times and sharp rises in costs for vital imported products such as paints and varnishes, timber, roofing materials, copper, steel and polymers. This may hinder the ability of construction activity to increase in line with our forecast.”

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