The construction industry is poised for significant growth following the recent election of the new Labour government, according to a leading industry intelligence firm, Glenigan.
Despite facing near-term challenges such as slow economic growth and persistently high interest rates, Glenigan’s latest forecast predicts a 7% growth in 2025 and a 6% growth in 2026, driven by reduced political uncertainty.
The newly elected government’s policies are expected to expedite decision-making processes around construction projects, thereby enhancing the sector’s performance. This acceleration is anticipated to bolster the economy, increase consumer spending, and boost investor confidence by the end of 2024.
Glenigan’s UK Construction Industry Forecast, which examines the period from 2024 to 2026, suggests that although the industry will have a difficult start, there will be a resurgence in project initiations in the latter half of 2024.
The report also highlights that the gradual easing of interest rates is likely to revive housing market activity from the second half of the current year.
Public Sector Construction Activity
The upcoming Spending Review is expected to outline the new government’s funding commitments and priorities, which will likely enhance public sector construction activities during the second half of the forecast period.
Allan Wilen, Glenigan’s economic director, commented, “There are signs of growth, signalling a gradual recovery. For example, in the private housing sector, we anticipate starts will pick up in the latter half of this year, driven by improved affordability and brighter economic prospects.
“Structural changes are expected to create new opportunities in office refurbishments and fit-outs, while logistics is poised for renewed investment fuelled by online retail growth.
“While the uncertainty during the pre-election period hinted at a slower pace of recovery, we could easily see an acceleration as the Labour government removes barriers to getting shovels in the ground, from easing planning restrictions to embarking on major capital projects.”
