Total value of construction in the UK - Data and Analysis (2010-2032)

Over the five-year period through 2026-27, the total value of construction output in Great Britain is forecast to increase at a compound annual rate of 5.1%, reaching £267 billion. Pre-COVID-19 (coronavirus), the total value of construction output in Great Britain increased year-on-year for seven consecutive years through 2019-20, irrespective of traditionally cyclical patterns in new development venture investment which are typical of modern construction markets. Recognising reduced capital spending amid post-financial crisis austerity may have hindered the domestic economic recovery, promises to accelerate investment in both social and critical infrastructure in the post-financial crisis era, so as to ultimately accelerate domestic economic output and enhance productive capacity, naturally inflated the value of overall construction output. Major transport infrastructure projects in particular – these include Crossrail, preliminary works for High Speed 2 (HS2), investment across the Strategic Road Network (SRN) via frameworks like the Road Investment Strategy (RIS) – have been, and continue to be, intrinsic to the value of total construction output. Meanwhile, a plethora supportive measures intended to accelerate the housing stock further stimulated construction activity and helped raise overall construction output to historically high levels. While prevalent post-referendum uncertainty in capital investment markets naturally caused momentum in new construction orders to decelerate markedly, as key stakeholders became risk-averse overnight in respect to approving budgets for big-ticket projects, the value of construction output continued on an upwards trajectory. With regional development, in respect to expanding social and regional infrastructure networks across the domestic market, being labelled a key policy objective – this was consistently reiterated in annual Budget announcements - and supported by private investors who were considered more risk-taking or otherwise had access to a significant funding stock, construction output across Great Britain continued to expand.Emerging in the UK market towards the tail-end of 2019-20, the coronavirus pandemic, however, reversed preceding gains in Great Britain's construction market. In order to combat its spread, the UK government and global counterparts implemented public health restrictions which were relaxed, re-imposed or otherwise modified ad hoc. These aforementioned public health restrictions caused severe supply chain disruption and ultimately resulted in an exogenous economic shock – the UK market entered a technical recession after two consecutive quarters of negative gross domestic product (GDP) growth Q2 2020 – whereby construction markets were not immune to commotion caused. Despite government permitting construction activity to continue throughout the pandemic, output volumes and values naturally declined initially, with ongoing supply chain disruptions preventing contractors from capitalising on the release of pent-up demand. With reference to ONS data, the total value of construction output in Great Britain declined by a record 33.4% quarter-on-quarter in Q2 2020, following on from a 7.5% quarterly decline in Q1 2020. Meanwhile, lead generation also initially slowed to the point of being near-frozen; according to the Chartered Institute of Procurement and Supply's (CIPS) UK Construction Purchasing Managers' Index (PMI), which is a measure of the prevailing direction of economic trends in construction and is based on a monthly survey of supply chain managers and contractors, new business volumes in UK construction fell at a "rapid pace" in April 2020, with the slump in demand as clients froze spending plans being noted as "by far the steepest recorded in more than two decades of data collection". While the release of pent-up demand and resumption of in-motion projects ignited an indicative recovery in construction activity – value output in Great Britain rebounded by 47.5% and 3.5% in Q3 2020 and Q4 2020 respectively - this was not enough to return full-year output back to its pre-pandemic level, in particular in the midst of a third nationwide lockdown for the duration of Q1 2021, which corresponded with a 4% contraction in value output. Overall, total construction output in Great Britain is declined by 14.6% on an annual basis in 2020-21.Moving into a new financial year, the reopening of the economy spurred indicative revival in new construction demand and output levels; reflecting market recovery as opposed to market outperformance, the total value of construction output in Great Britain increased for three consecutive quarters - by 10.1%, 4% and 0.8% in Q2 2021, Q3 2021 and Q4 2021 respectively – and is estimated to have recovered by 20.3% overall on an annual basis in 2021-22. Meanwhile, Q3 2021 marked the first quarter in which value construction output in Great Britain had surpassed its pre-pandemic level, when compared to Q4 2019, the last quarter of "normal" trading conditions in the UK market. Simply, the absence of most COVID restrictions, the reopening of the economy and a rush to capitalise on temporary stimulatory measures intended to spur expenditure, effectively prompted investors to release capital and pent-up demand, inducing a new cycle of construction activity heading deeper into 2021-22. While mounting inflationary cost pressures and ongoing, often intensifying, supply chain disruption continued to challenge contractors, causing output levels to lose momentum as the year progressed, 2021-22 was by far an improvement on 2020-21 across the industry from an output level perspective. In 2022-23, the value of construction output is forecast to expand further, continuing its post-COVID recovery; however, the rate of annual growth in 2022-23 (3.4%) is expected to be somewhat lacklustre, with soaring inflation – in the United Kingdom, it hit 10.1% in August 2022 - and Russia-Ukraine conflict-driven logistics issues compounding already soaring construction material costs; in turn, unprecedented shortages, delays and ultimately increases in prices of materials across the sector are expected to stifle any would-be exponential growth in output over the year.