UK Construction Activity Expected to Contract Further During Remainder of 2023

Industry analyst Glenigan, a provider of UK and Ireland construction project sales leads, market analysis, forecasting, and company intelligence, said on Thursday (6-22-23) in a report featured in Construction News (6-22-23) that new construction work in the UK will dry up so much in 2023 that it will take more than two years to recover.

According to Construction News, Glenigan is predicting an 18% dip in the value of new project starts in the UK this year, led by a collapse of private housing work in the wake of rising mortgage rates and shrinking household budgets. Although a strong 12% rebound is expected in 2024—and a further 3% growth in 2023—Glenigan does not believe that would be enough to make up for the lost ground during the substandard year of 2023.

The analysis points to limited household cash flow, which is likely to impact the retail and leisure sectors as well as housebuilding this year. The high cost of credit, materials, and labor will also weigh on almost all areas of the industry.

Construction News says the Glenigan report states: “UK economic performance is set to progressively brighten from next year, with the Office for Budget Responsibility forecasting that GDP growth will peak at 2.5 percent in 2025.” Adding that, “The improved UK economic performance includes a rise in private sector investment and housing market activity, which is forecast to support a recovery in construction starts during 2024 and 2025.”