Mace has increased its tender price forecast from 2.5% to 3.0% in London and 3.5% elsewhere in 2023, in light of further inflation in the UK, and warned of a potential recession.
In its Market View Q2 report Mace also nudged its forecasts for the next two years upwards. The report said tightness in the labour market had led to pay in the construction industry rising 1.8% in Q1 – up 6.2% compared with a year ago – and outlined that although output increased in Q1, this was due to the repair and maintenance sector with all new work declining 1.9%.
Andy Beard, global head of cost and commercial management at Mace, said: “Despite the news about inflation, we are in a much more hopeful position than we were a quarter ago. The economy has held up better than seemed likely at the start of the year, and prices have reacted accordingly.
“Notably, pay in construction is currently going from strength to strength, leaving us with little option but to increase tender prices for this year. Recent suggestions that interest rates could rise as high as 5.5% need careful watching. With the economy still incredibly fragile, such a shift could trigger a recession.”
