Introduction
General elections, and the prospect of a change of Government, have traditionally been regarded as a source of uncertainty for those making major capital investment decisions.
But, after the UK endured three supposedly ‘once in a generation’ shocks in the last eight years, from the Brexit referendum and implementation to a global pandemic and a major conflict in eastern Europe, the uncertainty surrounding this year’s election seems modest by comparison.
With manifestos yet to be presented, Britain’s post-election political course remains unclear, whichever party forms the next Government.
Construction pipelines are encouraging in some areas. In March, the Chancellor announced that the Government is to spend £160m to acquire sites in Wales and Gloucestershire for new nuclear development, and the global pharmaceutical giant AstraZeneca confirmed it is to invest £650m in its vaccine research and manufacturing sites in Liverpool and Cambridge.
Yet these programmes come against a challenging economic backdrop. With the UK in a recession, construction has had to grapple with the market volatility generated by high material and labour cost inflation, elevated borrowing costs, rising construction insolvencies and a contracting market. Consequently, risk management of the supply chain is even more important now than ever. This means identifying contractor risk early to ensure they are viable and reliable partners, a well-run tender process to attract the best bidders and a better balance of risk between client and the contractor.
Construction also needs to be effective and focused on our use of data and digital tools, and in attracting the skills needed to use them.
At a glance
2.0%
Construction output grew by two percent in 2023, outperforming the economy which grew by 0.1 percent over the year
-13.1%
Construction new orders fell by 13.1 percent in Q4 2023 compared to Q3
-5.8%
The Department for Business and Trade's 'All Work' material price index has fallen by 5.8 percent since peaking in July 2022 but remains 38.3 percent above their pre-pandemic level of Q4 2019.
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