Mace has increased its tender price forecast in light of UK inflation, as outlined in its recent Market View report
Mace has increased its 2023 tender price forecast by 2.5% to 3.0% in London and 3.5% elsewhere.
Forecasts for the following two years have also been nudged upwards.
Mace’s Market View report explores various factors impacting the UK construction market, including positive economic growth in Q1, the rate of material prices continuing to cool, and inflation.
It was revealed that the tightness in the UK labour market has led to regular pay in the construction industry reaccelerating.
The report also outlines that while construction output rose in Q1, this was due to the repair and maintenance sector, with all new work declining by 1.9%.
The housing sector continues to struggle
The housing sector continues to struggle with ongoing work and new orders. If interest rates continue to rise, the sector is likely to endure even more hardships.
Andy Beard, global head of cost and commercial management at Mace, commented: “Despite the news about inflation, we are in a much more hopeful position than we were a quarter ago. The economy has held up better than seemed likely at the start of the year, and prices have reacted accordingly.
“Notably, pay in construction is currently going from strength to strength, leaving us with little option but to increase tender prices for this year.
“Recent suggestions that interest rates could rise as high as 5.5% need careful watching. With the economy still incredibly fragile, such a shift could trigger a recession.”
