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Construction Industry

UK Construction Intelligence Report

2018 was a difficult year for construction in the UK with growth in new work around 0.8%, which is a decline in real terms. Forecasts for new work in 2019 have been downgraded from a range between 1 to 2% down to 0%. Growth in repairs and maintenance work of 1.2% gives an overall forecast increase in total construction output at 0.4% according to Experian.

UK Construction Output

2019 is expected to be a difficult year, but output is expected to pick up in 2020 and 2021, largely driven by housing and infrastructure.


Regional Construction Output

North East, York & Humber, East Anglia and the Scotland all saw a decline in outputs in 2018. London was fairly flat, as was the South West. However, the South East, North West and Wales saw a material increase in output.

Output
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Weakening demand, rising costs and lower margins

Slower growth and weakening demand is expected in 2019. There are rising costs and greater competition, which is putting pressure on contractor margins. 2018 saw the demise of Carilion, and there are other contractors in difficult positions. The expected 2019 performance means that supply chain organisations may be distressed, and this risk needs to be understood and mitigated. Those responsible for projects will be considering the financial standing of their supply chains, undertaking due diligence to help identify those that may be in trouble.