Economic forecasters have steadily upgraded projections for economic activity this year and the consensus now points to GDP growth of around 1.7% in 2017. With the nation poised to head to the polls once again, and a distinct lack of clarity about the impact of Brexit on businesses, significant downside risks threaten the outlook. Modest and precarious are probably more accurate descriptors of the outlook for the UK economy as we commence withdrawal negotiations.
London’s construction sector is still relatively busy and the disparity between supply and demand dynamics in the market for relatively straightforward mainstream projects and that for larger, relatively complex, major projects market, is increasing. Trends are becoming more polarised with competition building in the former and relatively restricted delivery capacity continuing to influence the latter.
Tender prices are forecast to edge downwards in the mainstream market as appetite for manageable risk increases. Further, modest, inflation is expected in the major projects market as the supply chain with the capacity and capability to deliver these projects remains tight.
If you would like a copy of our Update please contact Kelly Forrest, our Head of Research.