QUICK LINKS… Major announcements DECEMBER 2017 Brought to you by… Construction headlines About Us Detailed sector analysis Economic Context The Construction Sector Residential Infrastructure Commercial & Retail Hotel, Leisure & Sport Industrial IN THIS DECEMBER ISSUE… Medical & Health Education Construction contracts reached a total of £7.4 billion READ MORE Yorkshire & Humber led all regions with 38% of all contract value READ MORE Infrastructure contracts had a yearly increase of 176.6% compared Hinderton Point, Lloyd Drive, to November 2016 Cheshire Oaks, Cheshire, CH65 9HQ READ MORE T: 0151 353 3500 E: [email protected] FULL VERSION · AVAILABLE TO BARBOUR ABI CUSTOMERS, BUILDING AND BD SUBSCRIBERS ONLY W: www.barbour-abi.com @BarbourABI 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 ABOUT US… Specialist provider of DECEMBER 2017 construction intelligence About Us Economic Context Bespoke Research & Intelligence Market Insight The Construction Sector 2/ ,+,*&01& %"))),ƛ"/0"0-,(" Designed as the next level of analysis to our monthly research and tailored analysis as well as providing ,+,*& ǔ,+01/2 1&,+/("1"3&"4Ǿ1%&0#2))6 Residential consultations and speaking at industry events. interactive quarterly tool allows you to compare Barbour ABI is a leading provider of ,+,*&01& %")))Ǿ4,/(04&1% 201,*"/01, sector and regional construction data easily and construction intelligence services. With a Infrastructure ,ƛ"/"0-,("/"0"/ %+!1&),/"!+)60&00-" &Ɯ "ƛ" 1&3")6ǽ%&01,,)$&3"06,2!""-"/+)60&0+! team of in-house research specialists and for your individual business. He currently provides intelligence on the construction market, allowing you a dedicated lead economist, it provides Commercial & Retail consultations, detailed research as well as attend and your company to forecast trends and aid in your commercially relevant insight and unique speaking events, speaking on topics related to your business planning. analysis of trends and developments within the Hotel, Leisure & Sport individual business needs. ,)"/+*,/",21/("1 +0&$%1+!1,!,4+),! building and construction industry. Barbour your copy, click on the button below. Additionally, ABI is the chosen provider of industry data and Industrial to register your interest in our bespoke construction indicators for Government bodies including intelligence and tailored analysis please register your 1%"ƛ& "#,/1&,+)11&01& 0+!1%" interest by selecting the tick box in the enquiry form. Government’s Construction and Infrastructure Medical & Health Pipeline, which outlines future construction and infrastructure projects where public Education Michael Dall & %")&0/,2/ ȉ0"! ,+,*&010-" &)&0&+$ DOWNLOAD METHODOLOGY DOWNLOAD MARKET INSIGHT funding is agreed. Barbour ABI also provides in construction and the built environment. He data for independent organisations, such as the leads on Barbour ABI’s research and outputs on Construction Products Association. the construction sector assessing the trends and Barbour ABI is part of global events-led Partner of the Infrastructure and Projects Chosen provider of Construction New Orders !"3"),-*"+104%& %&*- 12-,+&1ǽ& %")&0)0, Authority in providing the National estimates to the ONS and communal dwellings data marketing services and communications a regular contributor to Building magazine, sits on Infrastructure and Construction Pipeline ,*-+6Ǿǽ the current CPA Forecasting Panel as well as being frequently noted in construction trade and the Hinderton Point, Lloyd Drive, Cheshire Oaks, national press. Cheshire, CH65 9HQ To contact Michael either: T: 0151 353 3500 T: 020 7560 4141 E: [email protected] Hinderton Point, Lloyd Drive, E: [email protected] W: www.barbour-abi.com Cheshire Oaks, Cheshire, CH65 9HQ ȯ& %") )) @BarbourABI T: 0151 353 3500 E: [email protected] W: www.barbour-abi.com @BarbourABI 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 ECONOMIC CONTEXT… Budget delivers spending 1.4% Forecast for DECEMBER 2017 GDP growth boost to housing in 2018 About Us Economic Context The UK Budget was delivered in the last month with money for infrastructure increased The Construction Sector 21" ,+,*& #,/" 0100&$+&Ɯ +1)6!,4+$/!"!ǽ Residential %"2!$"140!")&3"/"!1%&0*,+1%4%& %0"11 economy received the biggest downgrade since the was also downgraded to 1.4%, from 1.6% in its Inflation its heart a series of measures to raise productivity #&++ &) /&0&0&+!& 1&+$0,*"!&ƛ& 2)16"/0%"! previous forecast. Further downward revisions were %"#))&+1%"3)2",#1"/)&+$0&+ "1%"/"5&13,1" Infrastructure 4&1%&+1%"" ,+,*6ǽ 1)0,*',/"!,+*"02/"0 should the forecasts be correct. made to the forecasts in 2019 and 2020. Growth %0)"!1,-"/&,!,#%&$%"/&+#)1&,+&+1%"ǽ 1,0,)3"1%"ȉ0%,20&+$ /&0&0&+ )2!&+$ 2101,1%" is forecast to 1.3% in 2019, down from 1.7% in the From a rate of 0.7% in 2016 inflation is predicted to Commercial & Retail 1*-216+!5țȜ#,/#&/011&*"26"/00 UK GDP / %#&$2/"0+!&1&0-/"!& 1"!1,"ǖǽǘʢ$&+ peak at 2.7% in 2017, however that is up from 2.4% well as a series of reforms to the planning system. %"ȉ02-!1"!" ,+,*& #,/" 010#,/1%" &+ǗǕǗǕǾ!,4+#/,*ǖǽǞʢ&+1%"/ %"01&*1"ǽ &+1%"-/"3&,20#,/" 010&+/ %ț0""#&$ǽǖǽǗȜǽ%" Hotel, Leisure & Sport However, the main headlines were attributed to 0%,41%1 $/,41%&0+,4"01&*1"!1, Growth is expected to recover to 1.5% in 2021 and -/"!& 11%1&+#)1&,+4&))/" "!"1,ǗǽǙʢ&+ 1%"!"1"/&,/1&+$" ,+,*& #,/" 010#,/1%" be 1.5% in 2017, which was down from the 2% 1.6% in 2022 but that 2021 figure is a downgrade ǗǕǖǝǾ1%,2$%1%1&0%&$%"/1%+1%"Ǘǽǘʢ#,/" 01&+ Industrial " ,+,*6&+#212/"6"/0ǽ%",21),,(#,/1%" -/"!& 1"!&+/ %ț0""#&$ǽǖǽǖȜǽ%"#&$2/"#,/ǗǕǖǝ from 2%. its previous publication. Looking out to the end of the forecast period it is predicted that the inflation rate will be 2% in 2021, which is a year later than Medical & Health GDP 2016 2017 2018 2019 2020 2021 2022 Average Earnings 2016 2017 2018 2019 2020 2021 2022 -/"!& 1"!&+/ %ǽ Budget 2017 1.5 1.5 1.4 1.3 1.3 1.5 1.6 Budget 2017 Ǘǽǝ 2.3 2.3 2.3 2.6 3.0 3.1 Education / %ǗǕǖǜ ǖǽǝ 2.0 1.6 1.7 1.9 2.0 - / %ǗǕǖǜ 2.2 2.6 2.7 3.0 3.4 3.6 ~ Average Earnings One of the major implications of the higher level of inflation is a fall in real wages. If average earnings ECONOMIC CONTEXT 1.1 ECONOMIC CONTEXT 1.3 growth is lower than consumer price inflation then UK GDP | ,2/ "ǿ Average Earnings | ,2/ "ǿ /")4$"0/"#))&+$ǽ+!Ǿ ,/!&+$1,1%"Ǿ average earnings will grow by 2.3% in 2017 compared 1,+&+#)1&,+/1",#Ǘǽǜʢț0""#&$ǽǖǽǘȜǽ +ǗǕǖǝ1%" ț +Ɲ1&,+Ȝ 2016 2017 2018 2019 2020 2021 2022 Unemployment Rate 2016 2017 2018 2019 2020 2021 2022 rate of growth in average earnings is forecast to be Budget 2017 0.7 2.7 2.4 1.9 2.0 2.0 2.0 Budget 2017 4.9 4.4 4.3 4.4 4.6 4.6 4.6 Ǘǽǘʢ4%& %&001&))"),41%"/1",#&+#)1&,+ǽ%" / %ǗǕǖǜ 0.7 2.4 2.3 2.0 2.0 2.0 ~ / %ǗǕǖǜ 4.9 4.9 5.1 5.2 5.2 5.1 ~ rate of 2.3% is estimated to remain in 2019, but by that time inflation will have fallen to a level that real Hinderton Point, Lloyd Drive, ECONOMIC CONTEXT 1.2 ECONOMIC CONTEXT 1.4 wages will start to grow. Average earnings are then Cheshire Oaks, Cheshire, CH65 9HQ set to accelerate to 2.6% in 2020, down from 3.4% in ț +Ɲ1&,+Ȝ | ,2/ "ǿ Unemployment Rate | ,2/ "ǿ T: 0151 353 3500 E: [email protected] W: www.barbour-abi.com @BarbourABI 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 ECONOMIC CONTEXT… Budget delivers spending boost to housing / %ǽ+!&+ǗǕǗǖ3"/$""/+&+$0$/,41%&00"1 Outlook to reach 3.0%, a decrease from the 3.6% forecast in %"#&0 )&*- 1,#1%"0" %+$"01,1%"" ,+,*& The Budget Overview / %ǽ &+))66ǗǕǗǗ1%"3"/$""/+&+$0$/,41% outlook was an improvement in the short term but %"*+6-,)& 6*"02/"0#,/ ,+01/2 1&,+++,2+ "!&+1%"011"*"+1&+ )2!"!ǿ rate will be 3.1%. !"1"/&,/1&,+&+1%"),+$1"/*ǽ%&)"&+/ %&1 was estimated that the government would borrow £15.3bn additional spending for Funding includes a £1.1bn Land DECEMBER 2017 Unemployment ʐǚǝǽǘ&))&,+&+ǗǕǖǜȒǖǝǾ&1&0+,4"01&*1"!1, housing, meaning £44bn to be spent Assembly Fund and £2.7bn for the +)&("*,01,1%"/* /," ,+,*& &+!& 1,/01%" %3",//,4&+$/".2&/"*"+1,#ʐǙǞǽǞ&))&,+ț0"" &+1,1),3"/1%"+"51Ɯ3"6"/0 Housing Infrastructure fund unemployment forecasts improved in this Budget, #&$ǽǖǽǚȜǽ&*&)/)6Ǿ&+ǗǕǖǝȒǖǞ,//,4&+$&0#,/" 01 About Us /"#)" 1&+$1%"3&"41%11%"),2/*/("1 1,"ʐǘǞǽǚ&))&,+ ,*-/"!1,ʐǙǕǽǝ&))&,+ Review by Oliver Letwin of reasons Help for small builders including /"*&+0/,201ǽ%"2+"*-),6*"+1/1"%0""+ /".2&/"*"+1&+/ %ǽ ,4"3"/Ǿ,//,4&+$ why planning permission not £630m for the remediation of small Economic Context the consistently strongest performing economic is now forecast to be £34.7 billion in 2019-20 implemented sites and £8bn of guarantees to &+!& 1,/&+1%"+!1%&0),,(00"11, ,+1&+2"ǽ 4%"+&1400"11,"ʐǗǖǽǙ&))&,+&+1%"/ % underwrite loans The Construction Sector +"*-),6*"+1&0+,4#,/" 011,"ǙǽǙʢ&+ #,/" 010ǽ%1-11"/+ ,+1&+2"0&+1,ǗǕǗǕȒǗǖ4&1% Planning reforms including ,*-/"!1,ǙǽǞʢ&+/ %ǽ 1&01%"+#,/" 011,#)) ,//,4&+$#,/" 011,"ʐǘǗǽǝ&))&,+ ,*-/"!1, strengthening the proposed Housing 1*-!216,)&0%"!#,/Ɯ/011&*" Residential 1,Ǚǽǘʢ&+ǗǕǖǝǾ/"3&0"!#/,*ǚǽǖʢ11%"2!$"1&+ ʐǖǛǽǝ&))&,+&+1%"/ %!, 2*"+1ǽ Delivery Test and minimum densities buyers on properties up to £300,000 / %ț0""#&$ǽǖǽǙȜǽ+"*-),6*"+1&0-/"!& 1"!1, for urban areas in value Infrastructure rise slightly to 4.4% in 2019, but the corresponding #&$2/"&+/ %40ǚǽǗʢǽ 1&01%"+#,/" 011, 2--,/1#,/Ɯ3" /!"+,4+0&+ £1bn of further borrowing headroom Commercial & Retail reach 4.6% in 2020 and stay at that level until 2022, the South-east with New Town for councils to invest in building the end of the forecast window.