UK Construction Project Starts Down, Planning Approvals Up
A recent Glenigan report indicates that construction project-starts have more than halved (59%), against last year, explaining the slowdown in activity many contractors have noted throughout 2023. However the report also details planning approvals grew 17% compared with the year before.
Glenigan’s economic director, Allan Wilen, said: “This underwhelming performance is symptomatic of a number of external constraints on the UK construction industry. High interest rates and a persistently sluggish economy are continuing to depress consumer and investor confidence, resulting in lower levels of activity across most of the private sector.
“The downturn in public sector project-starts is particularly concerning, pointing to ongoing challenges for government departments in prioritising capital projects, despite a significant rollover of capital underspends from the previous financial year."
“Nevertheless, our recent Construction Forecast anticipates industry recovery in 2024, with starts expected to grow 8% next year. Furthermore, the recent surge in planning approvals offers a small glimmer of hope, with the potential to provide plenty of opportunities for agile contractors over the coming years.”
With last week’s announcement that core inflation has fallen from 11.1% in October 2022, to 4.6% in October 2023, a trend which we expect to continue going into the new year, the future is certainly looking brighter for UK construction. Private house building, refurbishments, and fit-out projects in particular stand to benefit greatly from the more favourable economic conditions. Coupled with the bottleneck of projects which have been approved for planning, and material supply chain & costs coming back to baseline, we believe 2024 will be a strong year for the construction sector.