Delays Stunting Output Growth

The biggest single issue dominating the Construction industry currently is delayed

start up.

From the Building Safety Act, through geopolitical and macroeconomic instability to

Trump’s tariffs, project funders are taking an increasingly cautious, measure twice

(and sometimes thrice), cut once.

Order books are strong and pipelines of opportunities, likewise but programming, re-

programming and value engineering are leaving contractors in a “lose, lose” position

of having to carry undeployed overhead and simultaneously struggling to increase

even inflationary costs arising from (often) months of delays.

Combined with increasingly onerous contract conditions, whilst we remain cautiously

optimistic for growth in Construction GDP in the 2025 calendar year, delays are a

cause for concern for boards throughout the industry.

The government’s housing target of 1.5M new build units over the lifetime of this

parliament is unlikely to be met. That’s being kind. 

Getting public street works adopted by local authorities for built out sites is like

catching sand, with many examples of nebulous reasons for non-adoption given.

We will be sending an open letter to the Deputy Prime Minister in the coming weeks

to highlight potential solutions to unlock output.

Civil Engineering projects of substance are few and far between, perhaps as a

consequence of the scars of HS2, whilst commercial building is seeing downward

pressure being applied to win new work, leading to a drop in tender success rates.

We still expect growth in Construction output this year but suspect Experian’s

forecast of 3.5% annualised growth and even the Construction Products Association

predicting 2.1% may be toppy. We feel 1% to 1.5% is more realistic, compared with a

contraction in 2024.