Construction is expected to receive a boost as a result of the new Labour government, a leading industry intelligence firm says.
Although the sector will face near-term challenges, including slow economic growth and persistently high interest rates, Glenigan is forecasting 7% growth in 2025 and 6% in the following year due to a reduction in political uncertainty.
Policy decisions around construction projects will likely be made faster, improving performance. This points to a strengthening economy expected to lift consumer spending and investor confidence towards the end of 2024.
Glenigan’s UK Construction Industry Forecast, which focuses on the next three years (2024-2026), said that despite a tough start, renewed growth in project starts is expected in the second half of 2024.
The gradual easing of interest rates is also expected to lead to improved housing market activity from the second half of this year.
Getting shovels in the ground
The Spending Review will set out the new government’s funding commitments and priorities and is expected to strengthen public sector construction activity during the second half of the forecast period.
Glenigan’s economic director, Allan Wilen, said: “There are signs of growth, signalling a gradual recovery. For example, in the private housing sector, we anticipate starts will pick up in the latter half of this year, driven by improved affordability and brighter economic prospects.
“Structural changes are expected to create new opportunities in office refurb and fit-out, while logistics is poised for renewed investment fuelled by online retail growth.
“Whilst the uncertainty during the pre-election period hinted at a slower pace of recovery, we could easily see an acceleration as the Labour government removes barriers to getting shovels in the ground from easing planning restrictions to embarking on major capital projects.”
