What's Happening?
The UK construction industry is experiencing significant financial pressure due to rising input costs, as highlighted in a report by Rider Levett Bucknall. Tender prices are expected to increase by 3.17% in 2025, slightly up from previous forecasts. Despite
a 24% increase in new infrastructure orders, the overall output has only risen by 1.5% year-on-year, with housing orders down by 12%. The industry is grappling with increased costs for labor and materials, particularly steel and copper, which are expected to rise by 3.91% in 2025. The Autumn Budget's commitment to infrastructure projects may alleviate some labor pressures, but the Building Safety Act could delay projects and deter investment.
Why It's Important?
The rising input costs in the UK construction industry could have broader implications for economic stakeholders, including contractors and developers. The increase in tender prices and input costs may lead to tighter profit margins, affecting the financial health of construction firms. The government's focus on infrastructure projects could provide some relief, but the potential delays and investment deterrents posed by the Building Safety Act could hinder growth. This situation underscores the delicate balance between new project announcements and cost pressures, which could impact the industry's ability to meet demand and maintain profitability.
