BCIS Assesses Autumn Statement Impact on Short Term Construction Demand

FOLLOWING THE Autumn Statement 2022 announcement, BCIS has given its estimation of the impact on short term construction over the next two years, with housing likely to be the worst hit sector.

“With the wider economy falling into recession, the Chancellor had a real balancing act to perform in the Autumn Statement. The announcements will affect the various sectors of the construction industry in different ways,” said Dr David Crosthwaite, Head of Consultancy Services at BCIS.

“Proposed increases in taxation, both personal and corporate, combined with the high interest rates will have a negative impact on the investment climate, leading to potential projects being stalled or postponed in the private sector.”

Housing Worst Hit

Housing is likely to be worst hit, with housebuilders already scaling back investment. The retention of the stamp duty relief until 31 March 2025 will do little to offset this.

The proposed funds for research and development and investment zones may produce increased capital expenditure in the medium term, in the private, commercial and industrial sectors.

The continued commitment to capital investment and the announcement to continue with the major infrastructure projects such as HS2, Northern Powerhouse Rail and Sizewell C, is likely to maintain infrastructure spending at its current high level and will be welcomed by the industry.

The continued commitment to the New Hospital Programme and increased investment in the NHS and schools may well support spending in the public sector.

With the economy shrinking and increasing costs, output from the commercial and industrial sector is likely to fall.

The setting up of the Energy Efficiency Task Force and the commitment of an additional £6bn funding between 2025 and 2028, to deliver energy efficiency, should give a boost to this sector if the funds are taken up.

Impact of Autumn Statement

BCIS estimates of the impact on construction output over the next two years are as follows:

• Housing – down
• Infrastructure – steady
• Other private – steady
• Commercial – down
• Industrial – down
• Repairs and maintenance housing – possibly up if people will spend the money on energy efficiency
• Repairs and maintenance infrastructure – up as some investment will be repairs and maintenance
• Repairs and maintenance public sector other – up given funding for health and schools
• Repairs and maintenance private sector other – down, less money available in the commercial sector

>> Read more about the Autumn Statement in the news