Earlier this month, the Construction Products Association (CPA) released their report on the coming year, and it’s bad news for the industry.
October 2022’s ‘mini budget’ and a further rise in the Bank of England’s base rate (3%) have set in motion a recession that could last two years.
As a result, construction output is predicted to fall 3.9% in 2023, and could fall further if rates are pushed up again.
Housing is expected to contribute to a lot of the downturn, with new build and private property moving down the list of priorities. Last month, Bellway homes expected challenges in the New Year, with margins and demand shrinking.
Property maintenance and improvements are also set to take a hit. Construction costs continue to be an issue across the sector, and with the days getting shorter and colder, energy costs are going to have a significant impact.
As well as this, an increase in mortgage rates has stalled the buyer’s market. Rates hit 6% last month, which will put homeowner’s in a difficult position when their fixed term is due for renewal. This has caused first time buyer demand to drop 20%.
And when things couldn’t look any bleaker, Jeremy Hunt is expected to announce further tax rises and cuts in the Autumn Statement on November 17th, with the aim to fill a £55 billion red hole in the UK’s finances.
However, it’s not all bad news. Hopefully, the recent boom that has seen significant growth in the past 18 months will offset this fall in productivity.
This time last year, a report issued by Glenigan predicted construction industry growth to rise from £54.2 billion in 2021 to £61 billion by 2023. It’s yet to be seen if this figure is on track, and with continued uncertainty in the financial markets this growth may need to be revised.
Tradesman Talk
Have you seen a downturn in the number of jobs you’re working on?
How do you think small businesses will navigate through the coming winter? And what’s in store for the industry in 2023?
As always, leave your comments below and click the social links to share this article with your audience.
