GDP figures show construction remains vulnerable

The Chartered Institute of Building (CIOB) has responded to today’s GDP figures published by the ONS (Office for National Statistics). The figures include data for December, detailing a picture of last year’s growth.

The figures show that construction output fell by 2.9 per cent in December 2020, following seven months of consecutive growth. Despite the industry remaining broadly open, all types of work in the sector saw a decline as businesses continued to adhere to social distancing measures along with site shutdowns as part of the Christmas period.

The decline was driven by falls in both private new housing and private commercial (3 per cent and 6 per cent respectively). This was due to falls in both new work (3.8 per cent) and repair and maintenance (1.5 per cent) which had been growing steadily since the first initial lockdown.

Due to steady growth between October and November 2020, quarterly construction output grew by 4.6 per cent compared to the previous quarter. This was driven by growth in new work, and repair and maintenance (4 per cent and 5.5 per cent respectively).

The increase in new work in Quarter 4 2020 is attributed to quarterly growth in all new work sectors, apart from private commercial, which decreased by 1.6 per cent. The increase in repair and maintenance was largely due to non-housing repair and maintenance, the sudden drop of which in December 2020 caused the monthly output to shrink for the first time since May 2020.

Throughout 2020, the construction industry remained resilient and worked tirelessly to help tackle the impacts of the Covid-19 pandemic, including the building of new hospitals and facilities, and keeping people in employment. The coming year will bring its own challenges for construction businesses, including the introduction of the VAT Reverse Charge, changes to IR35, and fundamental reform to the building safety regime.  As the world’s largest and most influential professional body for construction management, CIOB will continue to work with industry and partner bodies to understand how these issues will affect the industry, and represent these views to Government, to ensure construction is at the heart of the economic recovery.

Eddie Tuttle, Director of Policy, External Affairs and Research at the CIOB, said: “The fall in construction output in December, highlighted in the latest ONS figures, shows that the construction industry is still vulnerable to the economic impacts of the Covid-19 pandemic. While the industry has rebounded since the first national lockdown last year, growth is beginning to slow. The Government has been clear that the construction industry has a key role to play in supporting the UK economy to weather the storm, however we are worried that forthcoming measures will impede the industry’s ability to help ‘build back better’. CIOB is encouraging the Government to consider extending the Stamp Duty Land Tax holiday, and to immediately withdraw the VAT reverse charge, to support fragile businesses through this incredibly challenging time.”