Following the optimistic hopes of revival heralded by the election of a new Labour Government, it’s disappointing to see a drop in construction activity during the third quarter of 2024. However, could the upcoming budget announcement provide much-needed confidence? Read on, as we dive into the latest Glenigan Construction Review…
With the Autumn Budget Statement expected to bring changes to tax and planning policy, it’s understandable that the private sector remains hesitant. Likewise, a lack of clarity on public sector spending has led to start dates being pushed back and a general air of uncertainty. This can clearly be seen in the figures, with July to September seeing a 47% drop in detailed planning approvals compared to the same period in 2023 and a 22% decrease in project starts compared to the previous quarter. Main contract awards are also down 4% compared to Q2.
It is hoped that clarity on the budget and spending review announcements will help to alleviate the unease, with the Chancellor calling it a “budget for investment”. Supporting a long-term rise in business and public sector investment would have the potential to lift UK economic and productivity growth, as well as encourage an upturn in construction activity.
That said, there are some positives to take away, particularly looking at the Hotel & Leisure sector. Historically one of the UK’s hardest hit verticals, project starts are significantly up compared to previous figures, increasing 29% compared to Q2 and standing at 83% from 2023.
Civils also remains a sector of growth, with project starts rising 8% against the previous quarter. Energy projects accounted for the greatest share (72%), having grown almost six times from 2023. At £978 million, road projects also saw a large jump, increasing 84% on 2023 to account for a 12% share of project starts.
Interestingly, it was the Yorkshire & Humber region that accounted for 52% of civil project starts, the highest of any area. The value of projects in this region also jumped more than ten times against 2023, totalling £4,132 million.
Looking at overall project starts and it was the South West and Northern Ireland that experienced the most growth, standing at 13% and 42% above 2023. Surprisingly, London experienced a 9% decline against Q2, remaining 22% down from the previous year.
