New order slump is a short-term bump in the road to recovery

Latest News Wed, Jan 8, 2025 7:43 AM

Mace, the global delivery consultant and construction expert, has published its last quarterly UK Market View for 2024.

While the tender price forecast is up slightly, and new orders have fallen during this timeframe, the expectation is for recovery and long-term growth for the industry.

In the report, authored by Mace lead economist James Donald and Director of Cost and Commercial Management, Oliver North, the tender price inflation forecast nationally has risen from 3% to 3.5% for 2025 and 2026, whilst 2027 and 2028 remain at the same levels. The figures for London have also increased from 2.5% to 3% for 2025, with 2026 remaining at 3%.

The forecast reflects the Autumn Budget’s Employers’ National Insurance increase; however more significant changes have not been made. Government plans for increased spending had been anticipated in previous forecasts, with an increase of almost 10% in capital expenditure in the next fiscal year - although there is some uncertainty about how this will be spent and when it will reach the construction pipeline.

Over the last quarter, the statistics show that output has grown by 0.8%, with expansion of 2% in all new work, the first time this part of the industry has enjoyed growth since the final quarter of 2022.

However, in a reversal of data from the previous Market View, new orders have slumped by 22% in Q3, which is a symptom of getting new contracts finalised, and continues to be a problem. This has particularly impacted London, although the region is expected to benefit from two of the fastest growth sectors, data centres and life sciences.

The statistics reported in Q4 highlight the reality that 2024 has been another year with challenges. However, what is different is the macro environment and the policies of the new government that are expected to have a positive long-term impact.

Oliver North, Director of Cost and Commercial Management, Europe, Mace Consult said: “Whilst last year’s Q4 figures taken in isolation tell a story of an industry that has continued to have its challenges, what they don’t show yet is the difference being made by a new government that is taking an assertive position on enabling delivery and increasing capital expenditure.

“Over the coming months, pending the Spring announcements on the Planning and Infrastructure Bill and the Plan for Change, the pipeline will become clearer, which is anticipated to boost confidence, attract private investment and catalyse recovery and growth for the industry.”

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