The latest findings from the IHS Markit and CIPS UK Construction report, released in December 2019, showed a steady decline in business activity across the construction sector. This was due to Brexit and the General Election, held on 12 December, as highlighted by IHS Markit Economics Associate Director Tim Moore: “Brexit uncertainty and spending delays ahead of the General Election were once again the most commonly cited factors highlighted by firms experiencing a drop in construction activity.”
Survey respondents cited confidence that a steadier domestic political landscape and clarity on Brexit could deliver a much-needed boost to clients. After the Conservative party won a large majority in the General Election in December 2019, this may become more likely as the UK’s departure from the EU on 31st January becomes set in stone.
Looking ahead to 2020, construction companies may remain cautious in the early months of the year. After this period, however, construction prospects are set to brighten, as highlighted in the Glenigan 2020-21 Construction Industry Forecast which predicts a 2% rise in projects in 2020 and 5% in 2021. This is good news for the future of construction tenders.
The Glenigan Construction Industry Forecast 2020-21
The report, written before the General Election in December 2019, assumes the Conservative government is elected, Brexit is agreed, and an EU trade agreement is put in place. If these events come to pass, the construction market will grow by 2% in 2020 and a further 5% in 2021. The report provides a positive market analysis over the next two years, citing benefits from the promised increases in public sector investment and growth in construction of private housing. Private housing is expected to rise by 9% in 2020, with Birmingham becoming a strong hotspot for the 2022 Commonwealth Games.
Other areas of growth include:
- Affordable housing – affordable and social housing is set to rise by an estimated 25% in 2020.
- Education – a rise in new school buildings in London and other major cities suggests an 8% rise in 2020 and a further 7% in 2021.
- Health – funding for NHS England has risen by 14% to £6.7 bn for 2019/2020.
- Civil engineering work – larger high-profile projects such as the Thames Tideway, Hinkley Point and HS2 should maintain construction activity in the civil engineering sector.
For organisations growing their business in public sector procurement and OJEU tenders, it is worth mentioning that the OJEU thresholds have been updated for 2020-21. Ensure your business is ready for public and private sector procurement in 2020 by being aware of the changes. Read the latest OJEU thresholds now.
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