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Expert Warns of Slow-Down in UK Construction Sector

The latest report from Barbour ABI hints that the UK construction sector is showing signs of slowing down.

Although 2014 witnessed an increase of 2.8 percent on the year before, when compared to the 25.3 percent gain in 2013, it is evident that the rate of growth has slowed down.

Barbour ABI is a leading provider of construction information and statistics to the Office for National Statistics and the Government. This recent report attributes the slowdown to waning activity in the residential sector, which has tapered off after a speedy rise in 2013.

According to Michael Dall, Barbour ABI’s lead economist, a comparison of contract values in 2014 and 2013 reveals a growth of 2.8 percent. While this is better than a decrease, a moderate growth rate becomes evident when this percentage is compared to the 2012-2013 increase of 25.2 percent, and 2011-2012, which experienced 29.1 percent growth.

One of the main contributors to this slowing down is the prominence of the housing sector in the construction industry. Housing projects have predominated in the past couple of years: in 2014, they represented over a third of all contract value. While high activity levels in the residential sector drove growth in 2013, a reliance on it as a source of expansion and revenue had industry-wide percussions when it began to slow down in 2014.

Infrastructure sector decline is also having a significant effect. Fewer large-budget projects were awarded in 2014, likely due to a looming election and growing sense of political uncertainty. Infrastructure has seen a 29.7 percent reduction in contracts, compared to an 18.8 percent increase in 2013. There also appear to be fewer projects in the pipeline.

Figures obtained from Barbour ABI’s Economic & Construction Market Review indicate that London continues to lead the field, with the city accounting for 24 percent of the overall value of UK construction contracts last year.In second place is the South East (12 percent) and Scotland (11 percent). The North West, which features prominently in pre-election discussions, ranked fourth at 10 percent. Implementation of a £184 million-Smart Motorway scheme attracted a lot of investment to the region.

Other report highlights:

  • New construction contracts awarded in the UK in 2014 had a total value of £64.8 billion, which is an increase of 3.7 percent over the previous year.
  • 12,440 construction contracts were awarded in the UK, a 10.4 percent increase on 2013. Although the rate of growth is lower than 2013 and 2012, an upward pattern is still in evidence.

Barbour ABI is a premier provider of construction intelligence services. A dedicated lead economist and team of full-time research specialists compile and distribute commercially relevant insights and a comprehensive analysis of activity within the building and construction industry. The organisation is a chosen provider of industry information to Government bodies and the Construction and Infrastructure Pipeline, which summarises upcoming construction and infrastructure projects with public funding involved.

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