After a tumultuous period for the UK economy and construction industry, could the recent election results signal the start of much-needed stability for the construction industry? While only time will truly tell, Glenigan has produced its ‘Construction Under a Labour Government’ forecast, looking ahead to the years 2024-2026. Read on, as we provide the key highlights…
While economic growth is expected to be ‘sluggish’ for 2024, as we recover from the short recession of 2023, a progressive acceleration in economic growth is predicted for 2025 and 2026. This slowly strengthening UK economy should hopefully serve to boost both consumer and business confidence from the second half of 2024, with project starts on site also forecast to tentatively recover in 2024, leading to a stronger rise in 2026 as economic growth accelerates.
Looking at the Labour manifesto and there is plenty to be done. As well as the headline pledge to deliver 1.5 million new homes in England over the next parliament, it also commits to accelerating greater infrastructure and industrial investment through planning reform. Also of note is Labour’s Green Prosperity Plan, in which they seek to double onshore wind, triple solar power and quadruple offshore wind by 2030. Such a clear dedication to green and renewable energy will hopefully provide some much-needed industry confidence and a boost to pipeline developments.
As well as the energy sector, the industrial sector is also forecast to return to growth from 2024, primarily driven by the demand for logistics and light industrial projects. Likewise, office projects are expected to see a visible boost. While changing working patterns in the shadow of the pandemic are reducing the overall demand for office spaces, this same shift will be an important driver for office refurbishment projects, as landlords and business owners seek to remodel premises in support of hybrid working.
A sustained rise in civil engineering work is also expected over the next three years, driven primarily by an increase in utilities projects. One example of this is the significant planned capital expenditure by UK water companies (up to £96 billion over the next AMP8 period), ranging from major schemes such as new reservoirs, to smaller initiatives focussed on improving river quality and reduce discharges. Investment in renewable energy generation and distribution will be another area of growth, as we continue to work towards the net zero target.
While the forecast for UK construction over the next three years is promising, success and resilience will depend on the industry’s ability to adapt and innovate. By leveraging innovative approaches and new models, we can look to achieve faster, greener and more cost-effective outcomes.
