Running on Empty
The construction industry is facing a slow recovery as contractors and their supply chain struggle due to a lack of new projects. Challenges such as upcoming elections and the implementation of new regulations are further delaying the recovery process. Most regions in Great Britain have experienced a significant decline in orders for new work. Inflation is predicted to be around 1-2% for buildings and 3-6% for infrastructure projects in 2024. There is an expected ‘K’ shaped inflation trend for infrastructure as declining demand for rail and road projects is offset by increasing inflationary pressure for energy networks.
Spring Market View:
March 2024
Measures relating to the Building Safety Act are identified as a factor which could hinder the sector’s recovery. With the volume of new orders for 2023 over 20% lower than a year earlier, the industry is in need of new project opportunities.
However, implementation of new gateway approvals under the Act is slowing project approvals for higher-risk residential projects such as hospitals, housing and student accommodation, meaning that any recovery in work on site will be delayed until at least the second half of 2024.
With the public sector and residential sectors continuing to encounter headwinds in the first part of this year, low inflation is forecast for buildings for this year. Across the country, most regions have seen a decline in orders in the past year but the North East, Yorkshire and the Humber and the South West should see momentum maintained.
UK Construction Market View
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Simon Rawlinson, Head of Strategic Research and Insight
