Business investment in the construction industry recovered 223% in Q3 2020 having jumped £589m on the previous quarter, analysis of latest official data by R&D tax relief specialist Catax shows.
However, business investment in the sector was still 67.8% down year on year to £853m between July and September last year as pandemic disruption continued to hamper economic activity, latest ONS figures released on Friday (12th February) reveal1.
This was much worse than the performance of UK industry as a whole. Total UK business investment across all sectors dropped 19.2% annually in Q3 20202.
Quarterly UK GDP grew by 15.5% in Q3, however this pace of growth did slow later in the year, with only a 1% rise recorded for Q4. The result was that over 2020 as a whole, UK GDP shrank by 9.9% — the worst performance since modern records began. Construction sector output also fell in December by 2.9% following seven consecutive months of growth.
Mark Tighe, CEO of R&D tax relief consultancy Catax, comments: “This huge jump in business investment in the third quarter represents a promising rebound for the construction industry.
“However, it’s clear from the stubborn year on year decline and December’s output figures that the ongoing pandemic is weighing heavily on the ability of the sector to work its way back up the gears.
“This is likely to remain the case so long as the country continues to see repeated lockdowns, though the effect of the vaccine drive should allow the UK to throw off its Covid shackles and deliver some pretty impressive rises in investment and activity as we move through the year.”