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Industry reacts to GDP estimates released by the Office for National Statistics

Construction By Dr Olli Jones, Head of Sustainability – North East – 14 June 2024

Olli jones talking to a microphone on BBC News


Head and shoulders shot of Oliver wearing a dark shirt against a green and brown background

Dr Olli Jones

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It was a pleasure to join industry leaders to discuss the latest GDP estimates released by the Office for National Statistics on BBC news. The hot topic alongside the latest gross domestic product (GDP) figures was of course, the looming UK general elections, manifesto pledges and the general impact of political uncertainty on the investment in the UK.

The report shows that bad weather has had a direct impact on the construction industry for three consecutive months. Additionally, the faltering confidence of investors due to the UK’s political uncertainty is a large contributor to this downward trend. Unfortunately, political leaders are failing to realise and capitalise on the economic opportunities that the green transition can offer the UK. Speaking from the point of view of the UK Business Council for Sustainable Development, delivering a high growth economy, will require a more pioneering approach to environmental and economic policy.

The figures released showed no growth in the UK’s GDP in April 2024, following a growth of 0.4% in March 2024, and a growth of 0.7% over the last 3 months.

Within this, services output grew by 0.9% in the three months to April 2024. Information and communication as well as professional scientific and technical activities were the largest contributors to this growth, balanced by a drop in retail trade and food and beverage services. Production output fell by 0.9% in April but grew by 0.7% over the last three months.

Most pertinent to our industry is, of course, the construction output which fell by 1.4%, its third consecutive decrease, falling 2.2% over the last three months. Driven by a fall in manufacturing that was partially offset by growth in water supply, sewage, waste management and remediation activities along with mining and quarrying. The construction sector accounts for approximately 6% of the UK’s GDP. It is key to economic growth, as well as being a substantial source of tax for the government. It bolsters job creation and demand for goods and services. Importantly, the performance of the sector impacts allied industries, such as the production and transportation of materials.

New work within the construction sector decreased by 2.8% over the same three month period, and repair and maintenance decreased by 1.4%. Within new work, the largest contributor to the decrease in the three months to April 2024 came from private commercial new work, which decreased by 4.7%.

The decrease in construction output in April 2024 came from decreases in both new work (1.9% fall) and repair and maintenance (0.8% fall). At the sector level, the main contributors to the monthly decrease were private housing new work, which fell by 4.4% in April 2024, and private housing repair and maintenance, which decreased by 2.5% in the month.

The decline in construction activity, during April 2024 has also seen lower demand for construction products in the production sector during the month. Monthly falls were seen in other mining and quarrying and manufacture of various building materials.

The impacts of climate change have unequivocally played a role. Evidence from the Monthly Business Survey for Construction and Allied Trades (MBS) noted the effects of heavy rainfall and strong winds impacting output in April and the Met Office confirmed in their Monthly climate summary that April 2024 was unsettled and wet with storm activity.

With a view to the UK’s position internationally, we called upon political parties in the run up to the UK general election to move beyond industrial strategies and commit to creating transparent and measurable, longer-term sustainability focussed industrial plans. Those must be developed alongside industry to bring greater confidence and surety to the market, improving confidence in the UK for domestic and global investors. Nationally, we called for long term local sustainable development planning, as well as championing better alignment of tax incentives for retrofit and new build projects as well as the proper funding and delivery of a national housing retrofit programme.

Despite sharing our observations and promoting several key moves, above will enable the success of the UK construction sector and the emerging green economy.

I’m left with one niggling concern…

Are we really measuring all the right things?

To a lot less fanfare, an equally important statistical bulletin was released in May 2024 by the ONS Quality of Life team: Measuring progress, well-being and beyond GDP in the UK: May 2024.

I’ll leave you with some headlines to ponder from this bulletin, between 2018 – 2023 the percentage of people reporting low life satisfaction has increased to 5.8%. Economic inactivity in the UK has increased to 9.4 million (22.2%), adults aged 16 to 64 years with long term sickness cited as the most common reason. Compared to 2020 and 2022, in March 2024 adults are spending less time each day socialising and doing free activities. Further, 1.1 million fewer individuals gained health benefits from nature.

Over the last few years there has been a groundswell of activity across the globe focussed on Gross Domestic Wellbeing. It’s time we collectively focussed on the environment, people and communities, to put the S into ESG.