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What will happen to construction in 2020?

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At the end of every year, the construction industry’s pundits come up with their predictions for what they think will happen in the year to come, making considered judgements and analysis based on a raft of statistics, underpinned by genuine expertise and experience. But...

The problem with crystal-ball gazing in December 2019 was that the outcome of the general election on the 12th would mean that there were two, potentially widely-differing scenarios, depending on which of the two major parties won.  Moreover, any longer-term forecasts made prior to December had the major problem of not being able to unravel the uncertainty and lack of clarity caused by our politicians being unable to decide what they thought the public wanted as a result of the Brexit vote.

Significantly, the Glenigan Construction Industry Forecast (which I really rate), hedged its bets before the election.  As reported on the PBC (Planning, BIM and Construction Today) website, “assuming that the Conservatives were to win … Glenigan forecasts that after a 1% rise in 2019, the value of underlying project starts will rise by 2% in 2020 and by a further 5% in 2021 (with the bright spots including) “private and public (affordable) housing, education, health and civil engineering work.”  Although there was a concern that, post-Brexit (i.e. from February onwards) construction activity might decline before growing again in 2021, overall the expectation was generally positive.   

Now that we know the election result, Glenigan has updated its report.  This suggests that the stability produced by the substantial majority for Boris’s government is “set to release pent-up construction demand.”  Moreover, Glenigan is now more confident of its previous estimates, confirming that, in their opinion, we’ll see that 2% rise in the value of underlying project starts in 2020 and a further 5% in 2021.  Let’s hope so.  

In Scotland, things, as we know, are slightly different. However, with the Scottish government’s budget for 2020-21 postponed as a result of the general election until early in 2020, we don’t know exactly what they will propose for construction and property. It would be desirable to see a period of stability and clarity north of the border, but I fear it’s unlikely given the different goals of the UK and Scottish governments.

Unless the UK government makes a total mess of the trade agreement we need with the EU (always a possibility), then the increased confidence that comes with the aforementioned, post-election clarity and certainty ought to be beneficial for our industry.  Of course, we are overdue a (world) recession and one will arrive sooner or later.  Many of the key economic indicators suggested that it might have come in 2019, but there are some straws in the wind suggesting that the pressure is off for the time being.  But of increasing concern, more south of the border than in Scotland, will be the probability of increased recruitment difficulties for skilled site labour as a result of Brexit. I suspect that this will mean even more focus on the use of new and more efficient technologies in every area of construction (of which more next week). It’s going to be an interesting year.

Chris Peace, MD, Peace Recruitment

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