A fall in construction output helped shrink national gross domestic product (GDP) in October, according to new official data.
The Office for National Statistics (ONS) revealed construction output fell by 0.4 per cent in the month, after a rise of 0.1 per cent in September.
Repair and maintenance declined more than other industry activity, dropping by 1.3 per cent overall. The drop in private sector repair and maintenance stood at 3.8 per cent.
Construction’s decline contributed, alongside production, to a 0.1 per cent drop in national GDP in October.
In the three months to October 2024, GDP increased by 0.1 per cent, with construction growing by 0.4 per cent. GDP grew by 0.5 per cent in the second quarter of 2024 (April to June), according to the ONS.
The biggest contributor to new construction work in the three months to October was infrastructure, which was up by 3 per cent. Repair and maintenance on private housing dropped by 4 per cent over the same timeframe.
Aecom head of programme, project and cost management Scott Motley said: “A downturn in output comes as no surprise as we head into the winter months and begin to see the true impact the Autumn Budget has had on short-term decision making.”
However, planning reforms that came into effect on Thursday (12 December) including reintroducing mandatory housing targets for councils, are encouraging for the sector, he said.
“As firms look ahead to next year’s pipeline of work, they will be encouraged by the changes announced to the National Planning Policy Framework in a bid to unlock future development.
“Combined with interest rates taking a further drop, the outlook for new infrastructure and housing projects in 2025 looks brighter than it has for a number of years.”
Bloom Building Consultancy director Charlotte Whincup noted that construction was the country’s fastest growing industry in the three months to October before it slowed down ahead of the Budget.
She added that the government has a “mountain to climb” with its planning reforms seeking to kickstart housebuilding growth.
“The high cost of land and planning red tape are only parts of the puzzle of course – the high cost of finance is another. If there is one ray of light from Britain’s shrinking economy, it’s that it may strengthen the Bank of England’s resolve to keep trimming interest rates in 2025.
“Making it cheaper for developers to buy land and build homes will go a long way towards re-energising the battered residential construction sector,” she said.
Earlier today (13 December), the Department for Energy Security and Net Zero unveiled a Clean Energy Action Plan, which it said would speed up decisions on planning for critical energy projects.
Asked by Sky News about the overall shrinking of the economy in October, chancellor Rachel Reeves said economic recovery would take time.
“The numbers on GDP are disappointing but it’s not possible to turn around more than a decade of poor economic growth and stagnant living standards in just a few months.
“But you’ll see from the plans that we’ve been announcing – whether that’s the energy reforms we’ve published today, reforms to build 1.5 million homes we published yesterday, pensions reforms, the creation of a National Wealth Fund – this government is getting on with the job of improving economic growth and driving up living standards.”
