The value of construction project starts decreased 16% in the three months to the end of September and are now 32% lower than they were a year ago, according to the October 2023 edition of Glenigan’s Construction Index.
Glenigan’s index, which tracks all underlying projects with a total value of £100m or less, found residential construction starts decreased 10% on the preceding three months and fell back 26% on 2022 figures and non-residential project starts fell by 29% against the preceding three months, to stand 40% down on a year ago.
Civil engineering starts increased 8% against the preceding three month period, but they were still 28% down against the previous year and Glenigan said any growth was likely to be short-lived thanks to the government’s decision to cancel the northern leg of HS2.
The company said high-interest rates and the looming general election next year are also having an impact on activity.
Allan Wilen, economic director at Glenigan, said: “Many will be disappointed to see performance levels declining further, after an extremely tough six-month period. Given the persistent economic and political uncertainty it’s hardly surprising. With sky-high interest rates denting confidence, the government is spending thriftily, holding back investment in public sector areas until a degree of certainty returns to the economy.
“This is not being helped by the prospect of a hotly contested election within the next 12 months, which may see a change in administration. This will potentially usher in a period of purdah, delaying approvals and contract awards, further stifling activity. It’s already having a significant knock-on effect on a number of verticals, including education and health output, dampening overall construction-starts.
“The current furore surrounding HS2, and the real risk of its cancellation will no doubt strike another hammer blow, not just for infrastructure but many verticals where associated developments have already been given approval. The sector will need to brace itself for a depressed Q4, with recovery unlikely until the new year.”
