New PM ‘must intervene’ with construction sector at a standstill

Latest stats show output growth figures at 0.0% in the three-month on three-months to May this year.

construction, building

Housing building aspirations will be impossible to deliver without direct intervention from the new PM in a flatlining construction sector, the FMB warns.

Latest ONS stats show output growth figures at 0.0% in the three-month on three-months to May this year.

Sarah McMonagle, FMB director of communications, said Jeremy Hunt and Boris Johnson should be hearing “alarm bells” with the sector at a standstill.

“Whoever wins the race for PM, I want to see that person take decisive action in their first days in office by intervening to stimulate our waning sector, which is so vital to the health of the wider economy,” said McMonagle.

“Indeed, without it, our country’s housebuilding aspirations will be impossible to deliver.”

The FMB puts the poor performance of the sector over the past few months as partly down to a drop in  repairs and maintenance activity.

This part of the construction industry is particularly vulnerable to dips in consumer confidence, which the threat of a ‘no deal’ Brexit perpetuates.

“There would be no better way to encourage homeowners to commission building projects in the second half of this year than by slashing VAT on housing repair, maintenance, and improvement from 20% to 5%,” said McMonagle.

“Furthermore, when we asked our members how the next PM could best prevent an economic downturn, almost 90% felt this was the most effective way to achieve it.”

Overall, the new stats show:

  • Construction output increased by 0.6% in the month-on-month all work series in May 2019, driven by increases in both new work (0.4%) and repair and maintenance (1.2%)
  • Construction output growth was flat (0.0%) in the three-month on three-month all work series in May 2019; this was due to a fall in repair and maintenance of 0.5% being offset by a 0.3% increase in new work
  • In new work, the increase in the three-month on three-month series in May 2019 was driven by growth in private commercial new work (2.2%) and public new housing (8.4%)
  • In repair and maintenance, the decrease in the three-month on three-month series in May 2019 was because of declines in both private (2.5%) and public (3.2%) housing repair and maintenance

Clive Docwra, MD of construction consulting and design agency McBains, said the stats were cause for “cautious welcome”, in showing a moderate increase in output in May after two successive falls in March and April.

“We expected a much bleaker picture given the continuing fog surrounding Brexit and pessimistic predictions of a sluggish economy,” he said.

“Growth of 2.2% in private commercial new work and 8.4% in public new housing was also better than forecast.

“We fear this could be a temporary bounce, however, as the longer term outlook is one of uncertainty with many projects on hold until the detail of the UKs EU withdrawal becomes clearer,” he said.

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