Latest figures from the Office for National Statistics (ONS) show that construction output in the UK has continued to plummet.

The figures show that in June 2016 construction figures decreased by 0.9%, following a decline of 2.0% in May . However, the sub-sectors which haven’t suffered a month-on-month decrease in output include public new housing and private industrial work. There were year-on-year decreases in all work types except private new housing and non-housing repair and maintenance.

Despite a 0.4% monthly fall in new housing, overall demand for housing increased by 4.9% in June according to HM Revenue and Customs’ UK Property Transactions Statistics release. The ONS House Price Index for May 2016 reported an 8.1% increase in house prices in the year from May 2015, continuing the growth since mid-2013.

The year-on-year figures for infrastructure however were less than rosy, with output dropping a huge 7.5% compared to the same time last year. The recent delay to the ‘shovel-ready’ £18bn Hinkley Point C project will likely add further woe to the statistics in coming months.

Perhaps now more than ever, with long term borrowing rates the lowest they have ever been, the time is right for an infrastructure based fiscal stimulus to boost the economy. Government needs to act quickly to keep the construction and infrastructure sectors on an even keel.

On Wednesday 5 October, Nabarro will be hosting a panel debate chaired by Lord Daniel Finkelstein on ‘The Future of UK Infrastructure’. The session which will consider infrastructure policy announcements and spending commitments and their impact on the sector.

Author: Chris Hallam, Partner, Nabarro LLP - View Chris' profile here

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