GDP shrinks as construction output falls


The UK's gross domestic product (GDP) fell for the first time since 2012, according to the latest official estimates.

GDP dropped by 0.2% in the second quarter this year (April to June) all but undoing the slight growth of 0.5% seen in the first quarter.

The problems are partly explained by stockpiling and plans and production being put on hold due to the continual changing plans and uncertainty over Brexit. 


The Office of National Statistics (ONS) said today (9 August) that growth in the services sector virtually halted at 0.1% this quarter, the production sector contracted by 1.4% - driven by a sharp decline in manufacturing - while construction output decreased by 1.3% or £521m.

This Quarter 2 result in construction largely reversed the increase of 1.4% in the first quarter.

The decrease was driven by a fall of 2.6% in repair and maintenance this quarter, which was due largely to the 6.0% decline in private housing repair and maintenance, with a smaller contribution from the 0.9% fall in non-housing repair and maintenance.

In terms of new work, the story was even worse with 'public other new work' - not housing or infrastructure - seeing its largest quarter-on-quarter decline since quarterly records began in 1997, with a fall of 10.9%, driving an overall new work fall of 0.5% in Q2.

Construction output decreased by £521m over the quarter compared with Q1, with new work falling by £143m, with falls of £274m and £177m  in public other new work and private new housing respectively. These came alongside smaller falls in infrastructure and private industrial new work of £37m and £21m respectively.

Mark Robinson, Scape Group chief executive, comments on today’s ONS construction output data: 'Today’s data presents a grim outlook on the state of the construction industry, with a £521 million drop in activity on the quarter. We have seen the biggest quarter-on-quarter decline from the public sector since records began two decades ago – with local authorities both reluctant and unable to push forward with delivering new offices, schools, hospitals, surgeries and shops. The stark reality is both the public and private sector are continuing to err on the side of caution and new work has flat lined.

'This decline in output is not restricted to new work though, with the repair and maintenance of private housing falling by a staggering £325 million.

'The possibility of a vote of no confidence being tabled when parliament returns in September continues to increase, with there being a very real chance that we will crash out of the European Union in October while an election campaign is underway. This scenario is completely uncharted territory, but one thing is certain our economy continues to be affected by infighting in Westminster, our competitiveness on the world stage is being damaged each month, and the appeal of UK plc is falling.'

Output is defined as the amount chargeable to customers for building and civil engineering work done in the relevant period excluding Value Added Tax (VAT) and payments to subcontractors.

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