2020: The UK economy experienced a significant downturn in 2020 due to the COVID-19 pandemic. The country went into lockdown in March, which led to a sharp contraction in economic activity. Gross Domestic Product (GDP) fell by 9.9% in 2020, the largest annual decline on record. The unemployment rate increased from 3.9% in February 2020 to 4.9% in December 2020.
The COVID-19 pandemic had a significant impact on the construction industry in 2020, leading to a decline in activity as lockdowns were imposed and supply chains were disrupted. The industry faced increased uncertainty and many projects were delayed or cancelled. However, some segments of the industry, such as homebuilding and infrastructure projects, continued to perform well.
2021: The UK economy began to recover in 2021 as lockdown measures were eased and economic activity picked up. GDP grew by 4.3% in the first quarter of 2021, the fastest rate of quarterly growth on record. The unemployment rate fell to 4.5% in April 2021.
The construction industry rebounded strongly in 2021 as lockdown measures were eased and the economy began to recover. The industry benefited from the government’s efforts to stimulate the economy, including infrastructure spending and a stamp duty holiday that boosted demand for housing. However, the industry continued to face supply chain disruptions and shortages of materials, which put upward pressure on costs and led to some delays in completing projects.
2022: The UK economy continued to grow in 2022, with GDP increasing by 2.6% in the first quarter. The unemployment rate remained relatively stable, hovering around 4.5%. In November 2022, the Bank of England raised interest rates for the first time in over a decade, a sign of growing confidence in the strength of the economic recovery.
The construction industry in the UK remained strong in 2022, with continued growth in demand for housing and infrastructure projects. However, the sector faced ongoing challenges related to supply chain disruptions, rising costs, and skills shortages, which led to some delays in completing projects. The industry also faced increased scrutiny over its environmental impact, with calls for greater sustainability and a shift towards low-carbon construction methods.
How does the future look?
The UK Construction industry is currently experiencing a period of growth, with an increase in both new builds and refurbishment projects. In 2023, there are a number of opportunities for builders and main contractors, driven by the need for improved infrastructure, increased housing demand and the trend towards more energy-efficient buildings.
One key opportunity is the government’s investment in infrastructure projects, such as road and railway upgrades, which will create significant demand for building and construction services. Additionally, the rise of Smart City initiatives is driving a need for more sustainable buildings and infrastructure, presenting opportunities for companies specializing in green building technologies.
The demand for affordable housing also presents an opportunity for builders and main contractors. The government has set a target to build 300,000 new homes each year, and private developers are also investing in the sector. This creates a significant market for companies specializing in housing construction and development.
Furthermore, there is growing demand for the retrofit of existing buildings to improve energy efficiency and reduce carbon emissions. This provides opportunities for companies specializing in building services engineering, insulation and renewable energy solutions.
What do we forecast?
2023: The UK economy is expected to continue its upward trend in 2023, with GDP growth forecasted to reach around 3.0%. The unemployment rate is expected to remain stable, with a slight decrease to around 4.4%. The government’s infrastructure investment plans and continued stimulus measures are expected to support growth in the construction industry.
2024: The UK economy is expected to continue its upward trajectory in 2024, with GDP growth forecasted to reach around 3.5%. The unemployment rate is expected to continue its downward trend, potentially reaching 4.2%. The construction industry is expected to benefit from ongoing infrastructure investment and continued demand for housing, although rising costs and supply chain disruptions may pose challenges. The industry may also face increased pressure to adopt more sustainable and low-carbon construction practices.
UK Economy Summary
| Year | GDP growth (annual) | Unemployment rate |
| 2020 | -9.9% | 4.9% |
| 2021 | 4.3% | 4.5% |
| 2022 | 2.6% | 4.5% |
| 2023 (forecast) | 3.0% | 4.4% |
| 2024 (forecast) | 3.5% | 4.2% |
UK Construction Industry Summary
| Year | Summary |
| 2020 | Decline in activity due to COVID-19 pandemic and lockdowns, but some segments continued to perform well |
| 2021 | Rebound as lockdowns were eased and the economy recovered, boosted by government’s efforts to stimulate the economy |
| 2022 | Continued growth in demand for housing and infrastructure projects, facing challenges related to supply chain disruptions, rising costs, and skills shortages |
| 2023 (forecast) | Continued growth in the construction industry, supported by government’s infrastructure investment plans and stimulus measures, facing challenges related to rising costs and supply chain disruptions |
| 2024 (forecast) | Continued growth in the construction industry, facing challenges related to rising costs and supply chain disruptions, and increased pressure to adopt sustainable and low-carbon construction practices |
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