A path to growth and innovation

The recent UK Budget focused on construction and infrastructure. The Chancellor promised to invest around £100 billion in a range of infrastructure projects across key economic sectors, including transport, the NHS, education, housing and energy. This promises a period of investment and wider economic growth. Although supply and resource capacity in the industry were less clear.

It is encouraging to see the industry’s focus on innovation through the adoption of Modern Methods of Construction and using data to drive performance improvements. Changing regulations, including the Building Safety Act and heightened environmental standards, demand agility and responsiveness. By adapting swiftly to these changes and challenges, we can ensure that projects make a material difference in driving growth in the wider economy.

Macroeconomic indicators offer some optimism. With inflation now relatively low at 2.3%, and the Base Rate cut to 4.75%, the investment climate is slowly improving. A 16.5% rise in new orders in Q2 2024 reflects confidence, especially in infrastructure and commercial sectors. However, initiatives like HS2 and the New Hospital Programme will still need innovative thinking to improve efficiency and productivity. Changing our mindset can ensure real value is generated to offset the cost of extra public borrowing and suppressive impact of tax increases.

While we are buoyed by these positive developments, we must remain vigilant. Global economic shifts could present challenges. The second Trump term may lead to protectionist policies, which whilst temporarily boosting the US economy, could disrupt global trade and increase costs for imported materials—potentially affecting project budgets and timelines. Challenges such as contractor insolvencies, labour shortages, and fluctuating material costs also pose a significant risk. Our strength lies in our ability to navigate these complexities through creativity, the application of technology, and a renewed focus on delivering value for money.

The future of construction presents both opportunities and challenges. A focus on sustainability, innovation, and productivity will be critical to deliver the certainty clients need as they continue to invest in the built environment.