Infrastructure remains the main bright spot for UK construction, where any growth in construction at all will be reliant on the Government’s delivery of infrastructure projects. If realised, this would result in a 6.3 percent rise in infrastructure work in 2018. However, concerns for the industry escalated following Carillion’s liquidation as the firm accounted for £850 million of the sector’s projects. The length of the hiatus on Carillion sites will have a critical influence on growth, and it is too early to know what impact this will have on the 25,000-30,000 firms in its supply chain.

After the Grenfell Tower fire in June last year, 160 social housing towers were deemed unsafe and in need of urgent work. However, the sector is suffering from a lack of finance for local authorities and concerns over the capacity to deliver the work. The public housing repair, maintenance and improvement sector has fallen 20 percent since 2010, and despite urgency following the Grenfell Tower fire, output is expected to fall by a further two percent in 2018.

The sharpest decline for construction in 2018 will be in the commercial sector, and particularly felt in the offices sub-sector as a lack of clarity on the UK’s post-Brexit deal has led to a sharp fall in contract awards. Offices construction is expected to decline 15 percent in 2018 and 10 percent in 2019, with further concern this will accelerate if firms choose to move operations out of the UK into other EU member states.

Noble Francis, economics director at the Construction Products Association (CPA) said: “Recent construction output and Markit/CIPS data have already highlighted subdued activity in the construction industry and our latest forecasts suggest that 2018 is likely to be tough for the industry. Overall, we are forecasting construction output to remain broadly flat this year but this is before the full impacts of the liquidation of Carillion in January feed through the supply chain and government will need to take a key role in mitigating the effects as it has already done on the services part of Carillion.

“Infrastructure activity is still expected to grow by 6.3 percent this year if politicians are able to deliver on their many announcements of major projects and spending across roads, rail and energy. Government will also need to help councils with funding to address issues on social housing towers above 18 metres since the Grenfell tragedy. Output in public housing repair, maintenance and improvement has already fallen each month since the tragedy and, without assistance, will fall 2 percent this year.

“Output in the commercial sector, the second largest construction sector, is expected to fall during 2018, primarily driven by a fall in demand for new office space, particularly within London. We expect offices construction to fall 15 percent this year as Brexit uncertainty means that international investors hold back on major new investment in high-profile space in the capital.”