Promising Boost for UK Construction: Glenigan's 2024-2026 Forecast
Glenigan’s UK Construction Industry Forecast for 2024-2026 highlights a promising boost for the sector, driven by expedited planning processes, with anticipated growth in project-starts, improved investor confidence, and increased public sector construction activity, especially following the Spending Review, despite near-term challenges like slow economic growth and high interest rates.
Glenigan’s UK Construction Industry Forecast for 2024-2026 highlights a promising post-election boost for the sector, as the newly elected Government aims to reduce political uncertainty. Despite near-term challenges such as slow economic growth and persistently high interest rates, the forecast observes a post-election uplift, driven by market rallies and efforts to expedite planning processes.
Accelerated Policy Decisions Expected
The Glenigan Forecast suggests that policy decisions related to construction projects will likely be made more swiftly, enhancing the sector's performance. This points to a strengthening economy expected to boost consumer spending and investor confidence in the latter part of 2024.
Modest Recovery on the Horizon
This positive outlook signals a recovery in the not-so-distant future, with a modest increase in project-starts anticipated in the second half of 2024. This is expected to lift starts by 3% this year. As the economy gains further momentum in 2025, Glenigan predicts 7% growth, followed by a 6% increase in 2026.
A Slow Start to 2024
The first half of 2024 has been sluggish for UK construction, with high interest rates and a weak economic outlook denting investor and consumer confidence. The General Election has also impacted the pipeline of public-sector construction projects. The purdah period disrupted progress on publicly funded projects, and decisions are expected to be delayed post-election as the new Labour government reviews existing programmes, including the Lower Thames Crossing .
Spending Review to Bolster Public Sector Activity
However, improved economic conditions, with the UK economy forecast to grow by around 0.8% in 2024, and greater political certainty, should help boost investor confidence from the second half of 2024 and into 2025. The gradual easing of interest rates is also expected to lift housing market activity .
The forthcoming Spending Review is anticipated to outline the new government's funding commitments and priorities, which should strengthen public sector construction activity in the latter half of the forecast period .
Gradual Growth as the True Reward
Glenigan’s economic director, Allan Wilen, comments on the forecast, noting signs of growth and a gradual recovery. "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. Similarly, we’re forecasting improved activity in consumer-related verticals such as retail and hotel & leisure, as a gradual easing in price inflation is set to boost households’ spending power" .
Wilen also highlights opportunities in office refurbishment and fit-out, driven by structural changes, while the logistics sector is poised for renewed investment fuelled by online retail growth .
Impact of Labour’s Majority
Wilen acknowledges the significant impact of the recent General Election on industry performance, particularly in the public sector. "No one could have predicted a landslide of such large proportions. While the pre-election period hinted at a slower pace of recovery, we could 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" .
"It will be interesting to revisit our predictions in November when the new administration has had time to make its mark, announce its autumn budget, and publish its keenly anticipated Spending Review," he adds.
In summary, Glenigan’s UK Construction Industry Forecast for 2024-2026 offers a cautiously optimistic outlook, with anticipated growth fuelled by post-election confidence and strategic policy decisions. While the sector faces near-term challenges, the medium-term forecast suggests a steady recovery and growth trajectory.
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