Major projects helping to ensure stability for UK construction sector, Glenigan finds

Major project starts have helped to maintain sector-wide stability, construction sector monitor Glenigan has revealed in its the November 2022 edition on its Construction Review.

The Review focuses on the three months to the end of October 2022, covering all major (>£100M) and underlying (<£100M) projects, with all underlying figures seasonally adjusted, and indicated that the downward trajectory of new project starts has slowed on previous editions.

While major project starts rose 28% on the preceding quarter, and are up nearly 20% on the same period last year, underlying starts fell 17% and were down 13% on 2021. Glenigan warned however that while major schemes were pressing ahead, geopolitical instability in Eastern Europe and rising materials and energy costs continued to impact confidence.

Across all construction sectors, only utilities starts saw growth on last year’s performance (+14%), with hotel and leisure (-38%), education (-24%) and residential (-21%) project starts seeing the biggest declines in activity. Wales, Scotland and Northern Ireland were the best performing parts of the UK, with activity up 25%, 19% and 31% respectively on last year. The North-west was the top performing English regions, seeing only a modest 2% decline in project starts, and no change on the previous three months.

Commenting on the results, Glenigan’s Economic Director, Allan Wilen, said,

“UK construction continues to be buffeted by myriad external headwinds, many of which are entirely out of the industry’s control. However, it was encouraging to see a significant uplift in major projects over the period covered by the Review.”

Commenting on the Chancellor’s recent Autumn Statement, he continued,

“Of course, the release of the November Review comes in the wake of The Chancellor’s sober Autumn Statement, which will no doubt have an effect on future iterations of this report. Significantly, as part of his drive for growth, Hunt outlined the largest public works package for 40 years and substantial funding for critical infrastructure, which will no doubt provide the shot in the arm many contractors have been looking for. Furthermore, the commitment to reduce built environment emissions by 15% by 2030 will provide plenty of opportunities for retrofit specialists.

“No doubt many housebuilders and developers will feel let down, particularly as the one significant point around the ending of Stamp Duty relief will no doubt disincentivise potential buyers in the second half of 2023.”