That’s according to a forecast by the Construction Products
Association (CPA), which takes into account the new lockdown restrictions over
winter 2020/21 before a sustained recovery from the second quarter of 2021 as vaccines
are rolled out and the services-based economy can reopen again.
The CPA said that while some sectors of construction are dependent
on consumer and business confidence returning, construction activity has
largely been able to bounce back quicker than the overall economy.
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The 14% rise expected in 2021 will follow an estimated
construction of 14.3% in 2020, caused by the sharp fall in the first half of
last year. But the CPA warned that output was only expected to return to
pre-covid levels in 2022 and that there was a risk that once the furlough and
self-employment support schemes end in April, there may be a sharp rise in unemployment
that could potentially dampen the recovery.
The CPA found that private housing was one of the quickest
sectors to recover in 2020, with pent-up demand for housing as well as the
government’s stamp duty holiday and the end of the first phase of Help to Buy
largely driving the recovery in this sector. It predicted that demand for
private housing would “moderate” in 2021 after these policies end on 31 March
and then subsequently pick up once again in line with the economic recovery
throughout late 2021 and 2022.
The commercial sector has endured a slower recovery and is
likely to be affected in 2021 and 2022 by the long-term shift to e-commerce.
The CPA added that the question of whether the shift to homeworking is
permanent will be crucial to determining demand for office space.
But homeworking has had a positive impact on the private
housing RM&I sector, with households investing accumulated savings from
lower daily expenditure back into homes. The CPA said that while this trend was
dependent on job security, the extension of the government’s Green Homes Grant
in April may help to boost activity.
CPA’s economics director, Noble Francis, said: “The spectre
of a ‘No Deal’ Brexit that would have badly affected the UK economy and construction
in the short term has been avoided but questions over the long term impact of covid-19
on the structure of the economy still remain. This continues to leave questions
about the fortunes of certain construction sectors. This is most notable in the
commercial sector, where there is still lots of uncertainty about the future of
retail and office space. It will be crucial to observe how businesses change
their operations as the vaccine is rolled out in the coming months and to what
extent there is a ‘return to the office’.
“While the fortunes of some sectors have been tied to covid
restrictions and associated business and consumer confidence in the wider
economy, infrastructure has largely escaped such uncertainty. Projects have
been able to effectively enact safe operating procedures given the sector’s
large construction sites that have fewer different trades mixing than in most
sectors. As such, infrastructure has been least-affected by covid restrictions
and output is expected to lift the whole industry over 2021 and 2022. Main
works on HS2, Europe’s largest construction project, along with offshore wind
and nuclear projects are expected to be the main drivers of activity.”
