Construction is set to become a two-speed industry over the coming years

If predictions are to be believed, the construction industry is on course to become a two-speed industry that is split by higher growth rates against the ‘slow-growers’ in the industrial and commercial sector. Leading consultants Arcadis are predicting this gap to widen even further as we head into 2021.

The latest forecasts from the firm are predicting 3% deflation in building costs this year however infrastructure can reap the benefits of 2-3% growth per annum for at least another 2 years.

It is thought that the dreaded second wave of Covid-19, in conjunction with the official Brexit leaving date of 31st December is putting further dents into an already low investor confidence in property, suppressing demand for building in the future.

Unfortunately, the industrial and commercial sub-sectors are not expecting to recover to 2019 levels until at least 2022. Changes to the Help to Buy scheme are also ensuring that housing faces its fair share of headwinds in 2021.

Simon Rawlinson, who is the Head of Strategic Research at Arcadis said “the differences in the pace of recovery between the sectors underlines the scale of the challenge”.  He added, “to ensure an ongoing recovery, it is critical for businesses to have strong resiliency measures in place”.

For the long-term, Arcadis is forecasting a return to above-trend inflation in all sectors from 2023 and beyond, that of which is being driven by labour market constraints. This depends on the speed of demand levels picking up. There is a great deal of risk attached to the Covid-19 pandemic and Brexit, therefore, planning for recovery is going to be extremely hard.