Business investment in the construction industry collapsed by 36% annually as the coronavirus pandemic ravaged the economy, analysis of latest official data by specialist tax relief consultancy Catax shows1.
Total business investment in the sector fell to £1.8bn in the second quarter of 2020, down from £2.8bn in Q2 2019, latest ONS figures released yesterday show1.
This was even more pronounced than the dramatic slowdown seen in the wider economy. Overall business investment across UK industry fell 26.1% in Q2 compared with the second quarter of 20192.
UK GDP shrank 20.4% in Q2, with widespread declines across all main sectors of the economy3.
The picture has, however, improved more recently with the ONS reporting that GDP grew 8% in the three months to the end of August4 as lockdown measures eased, raising hopes of a steep recovery in investment.
Mark Tighe, CEO of tax relief consultancy Catax, comments:
“This year has caught everyone off guard. The second quarter was when the pandemic really saw economies slamming on the brakes, with the national lockdown in the UK being announced on March 23, just before it began.
“The construction industry fared much worse than UK industry as a whole, likely due to the way the sector is much more vulnerable to disruption caused by lockdown.
“It will take some time for business investment to climb back to where it was at the start of the year, when the only threat on the horizon appeared to be Brexit negotiations. The speed of that recovery will depend very much on how long the second wave lasts and how much more disruption is to come.”