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Internal Market, Industry, Entrepreneurship and SMEs
United Kingdom - ECSO country fact sheet
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Over the 2010-2020 period, the United Kingdom (UK) GDP increased by 8.1%, totalling GBP 1.9 trillion (EUR 2.3 trillion) in 2020. However, the GDP declined by 9.7% in 2020 over the previous year.

In line with the overall economy, the broad construction sector in the UK also gained momentum. The number of enterprises in the broad construction sector totalled 551,212 in 2018, representing an increase of 31.5% over the 2010‑2018 period. This growth is primarily attributable to a 44.6% and 32.5% increase in the architectural and engineering and the real estate activities sub-sectors, respectively.

After witnessing a drop in 2012, the volume index of production in the broad construction sector has been on a constant rise, increasing by 12.4% over the 2015‑2019 period. In parallel, the construction of civil engineering and buildings also experienced a growth of 18.4% and 11.6%, respectively, during the above referred period.

Likewise, the total turnover in the broad construction sector stood at EUR 450.1 billion in 2017, representing an increase of 32.9% compared to 2010 (EUR 338.7 billion). It further increased to EUR 494.6 billion in 2018, a 46.0% increase since 2010. This overall increase was mainly driven by growths in the narrow construction (+48.7%), architectural and engineering activities (+53.4%) and real estate activities (+40.0%) sub-sectors over the 2010-2018 period.

Similarly, the gross operating surplus of the broad construction sector recorded a substantial 73.0% increase between 2010 and 2018, reaching EUR 123.8 billion. This was primarily driven by an increase in the manufacturing sub-sector (+159.8%), followed by the architectural and engineering activities (+76.7%), the narrow construction (+74.0%) and the real estate activities (59.5%) sub‑sectors over the same period.

Correspondingly, the gross operating rate of the broad construction sector, an indicator of the sector’s profitability, increased from 21.1% in 2010 to 25.0% in 2018. This is well above the EU-27 average of 16.7%.

In terms of employment, there were 2,808,485 persons employed in the UK broad construction sector in 2018, representing an increase of 14.9% over 2010. This was driven by a rise in employment in the architectural and engineering activities (+23.9%), the real estate activities (+20.0%), the manufacturing (+12.6%) and the narrow construction (+10.8%) sub-sectors during the same period.

31.5%
Number of enterprises in the broad construction sector between 2010 and 2018
12.4%
Volume index of production in the broad construction sector over the 2015-2019 period
46.0%
Turnover in the broad construction sector between 2010 and 2018

In parallel to the growth in employment, the UK housing market is facing two key issues. House prices have increased significantly in recent years, adding pressure to the shortage of affordable housing in the country. Although residential construction also picked up recently partly due to the implementation and further extension of the government’s ‘Help to Buy’ scheme through March 2023, it is still not enough to meet the overall market demand.

To address this issue, the government added GBP 500.0 million (EUR 597.2 million) in 2018 to the Housing Infrastructure Fund, which is now worth GBP 5.5 billion (EUR 6.1 billion), to support the construction of 400,000 housing units by 2021. In its Autumn Budget 2021, the UK government allocated GBP 1.7 billion (EUR 2.0 billion) from the “Levelling Up Fund” into towns and cities across England. Further, as per the “Roadmap to Recovery” initiative launched in October 2021, the UK’s Green Homes Grant will invest grants worth GBP 2.0 billion (EUR 2.4 billion) to support residential buildings in improving their energy efficiency. The grant will also finance retrofit projects amounting to GBP 1.0 billion (EUR 1.2 billion) so as to improve the energy efficiency of public sector buildings.

Additionally, in October 2021, the UK government announced its “Heat and Buildings Strategy” focused on incentivizing households to adapt their operations to minimise greenhouse gas emissions across the life cycle of residential buildings. The UK government is looking for opportunities to deliver homes on vacant, brownfield land and other land closer to existing houses, thereby permitting synergies with local amenities and infrastructure.

Under the Autumn Budget 2021, the UK government has allocated GBP 6.1 billion (EUR 7.3 billion) for investment in its Transport Decarbonisation Plan. The country has also allocated GBP 3.9 billion (EUR 4.7 billion) for investment in the decarbonisation of buildings across the UK, with a plan to further invest GBP 1.8 billion (EUR 2.1 billion) into supporting low-income households to make the net-zero transition .

Currently, UK’s infrastructure networks are under pressure with its rail, road and aviation networks reaching their capacity limit. The country has already started taking steps to cover its infrastructure deficit. Under its “Roadmap to Recovery” initiative, the UK government has announced an accelerated pipeline of 340 projects amounting to GBP 37.0 billion (EUR 44.2 billion) from the National Infrastructure and Construction Pipeline, including investment in transport infrastructure and local growth projects. In November 2021, the UK government announced a GBP 96.0 billion (EUR 114.7 billion) Integrated Rail Plan (IRP) outlining major projects including High Speed 2 (HS2) Phase 2b, Northern Powerhouse Rail and Midlands Rail Hub as well as their delivery schedule across the North and Midlands regions. Moreover, in its Autumn Budget 2021, the UK government announced its plans to invest GBP 2.6 billion (EUR 3.1 billion) in road maintenance between 2020 and 2025.

The UK broad construction sector is also suffering from labour shortages. The UK’s exit from the EU Single Market has worsened the current skills shortage for the construction sector. The ongoing COVID-19 pandemic is also expected to have both short and long-term impacts on the construction sector.