Forecast predicts a 12% recovery for UK construction in 2024
22 June 2023
Glenigan, a construction insight and intelligence company, has released its UK Construction Industry Forecast 2023-2025.
The key message conveyed in this forecast, focusing on the next three years (2023-2025), is that the construction industry will face significant challenges due to extremely difficult economic conditions, with projected declines of 18% in 2023.
Nevertheless, there is hope for recovery in the near future, with a predicted increase of 12% in 2024 and 3% in 2025.
The decline in construction observed in the first four months of the current year can be attributed to the aftermath of last year’s mini-budget and a pessimistic outlook that negatively impacted investor and consumer confidence.
Ongoing conflicts in Eastern Europe, material shortages, inflationary pressures on costs, and recent spikes in interest rates are expected to further postpone work commencement throughout the remainder of the year, resulting in an anticipated 18% decrease.
Despite the challenging start to the year and persistently difficult conditions during the latter half of 2023, the forecast anticipates a revival of construction growth in 2024 and 2025. The presence of strong development pipelines is already contributing to increased industrial and office project starts. Furthermore, improved consumer confidence and real-wage growth are expected to stimulate activity in consumer-related sectors.
In 2023, public sector construction is expected to serve as a relatively positive aspect, as government departmental capital programs receive a boost from underspending carried over into the current financial year.
However, disruptions in project starts are likely in the lead-up to the next general election and post-election, as a new administration intends to review and consolidate ongoing public sector investment programs.
Commenting on the Forecast, Glenigan’s Economic Director Allan Wilen says, “The pattern of UK construction activity is being reshaped by economic slowdown and structural changes, while new regulations are transforming how projects are delivered. We are still in a state of extreme uncertainty, and the industry is set for a challenging period over the coming year, but there’s light at the end of the tunnel. Structural changes are expected to create new opportunities in logistics, office and retail refurbishment and fit out, and the repurposing of redundant commercial premises. Firms will need to be responsive and adaptable to identify these growth areas and exploit new opportunities as they emerge over the next three years.”