Stace Outlook Index, November 2019

The Stace Outlook Index brings you the latest updates on the UK economy, the industry and our Tender Price Index (TPI) forecasts.

Will certainty deliver a brighter outlook?

The UK has remained resilient through these uncertain times. Concerns that UK plc was falling into a recession have welcomingly been muted for the time being, as the UK grew 0.3% in Q3. This follows the 0.2% contraction in Q2. Economic bodies are forecasting 1.3% GDP growth for 2019, as well as beginning to revise down their growth predictions for 2020.

Businesses have maintained their cautious approach with Q2 2019 business investment decreasing by 0.4%.

This caution stretches right across the construction industry, as seen in the latest RICS survey. Anecdotal evidence from respondents in the Q3 2019 RICS UK Construction and Infrastructure Market Survey suggests unsurprisingly that the housing market slowdown, coupled with unrelenting Brexit and political uncertainty, is weighing on investment decisions.

However, the construction sector has welcomed the positive news that output increased by 0.6% in Q3 2019, which partially reversed the decrease of 1.2% in Q2.

Due to the uncertain times, the TPI remains inconsistent with industry commentators forecasting a range between 1.0% increase to 4.1% for 2020.

As the country heads to the polling stations for a third general election in five years, we hope this will provide the much-needed certainty and platform for the incoming Government to bring stability to the UK.

Reference List

EY ITEM Club, Autumn Forecast 2019. Available from: https://www.ey.com/en_uk

ONS, UK Economic Data. Available from: https://www.ons.gov.uk/

RICS, Q3 2019 UK Construction and Infrastructure Market Survey. Available from: https://www.rics.org/uk/

Bank of England, Current Bank Rate. Available from: https://www.bankofengland.co.uk/

The Construction Index, Construction output up by 0.6% in Q3. Available from: https://www.theconstructionindex.co.uk/

Infrastructure Intelligence, Brexit uncertainty constrains construction sector optimism, says new RICS survey. Available from: http://www.infrastructure-intelligence.com/

Building, Contractors’ salaries rise at slowest rate for five years. Available from: https://www.building.co.uk/

DISCLAIMER

The information contained in our biannual Stace Outlook Index is for general purposes only. The content provided by Stace LLP always endeavours to be up to date and accurate. Stace LLP accepts no responsibility for any loss arising from any action taken or not taken by anyone using this material. The Tender Price Forecast may be required to change when discussing project specific requirements. The data is obtained from sources including the ONS, Monetary Policy Committee Reports and RICS.