Decarbonisation policies and more housing transactions would support I&R growth
UK real output in construction sector new work and I&R under housebuilding and net zero path (index 2023=100)
Our model suggests that real output in improvements and repair (I&R) could rise 51% above its 2023 level by 2033. That compares to new work, which sees a smaller 30% rise by 2033. The strong rise in I&R activity is largely driven by housing. Housing I&R rises to 2.4% of GDP by 2033, up from 1.7% in 2023. Non- housing I&R remains around 1.4% of GDP over the next decade. Housing I&R is set to see a boost from more transactions and retrofit activity. Greater housing supply should help to soften house price growth. That would boost transaction volumes and general home improvements, which tend to move closely together. In addition, the next decade sees a step-up in retrofit work, in line with the CCC’s investment pathway for residential buildings. Further investment is required between 2034 and 2050 to reach net zero.
New work
I&R
2023=100
160
140
120
2023=100
100
80
60
2003 2006 2009 2012 2015 2018 2021 2024 2027 2030 2033
UK real I&R output by housing and non-housing components under housebuilding and net zero path (share of GDP, %)
UK housing transaction volumes and real housing I&R output per dwelling under housebuilding and net zero path (year-on- year change, %)
Net zero industrial, retail, other
Industrial, retail, other
Housing transactions
Housing I&R per dwelling
Housing retrofit
Housing work from transactions
80
5
60
4
40
3
20
2
0
1
-20
0
2009 2012 2015 2018 2021 2024 2027 2030 2033
2003 2006 2009 2012 2015 2018 2021 2024 2027 2030 2033
Sources: Capital Economics, ONS and Climate Change Committee *Note: Improvements and repairs (I&R) refers to the repair and maintenance (R&M)) category in the ONS Construction output tables.
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