Labour government set to usher in rise in new project starts, forecaster says

Glenigan is expecting projects start to jump 7% next year as the new Labour government pushes on with a public sector spending plan.

The data specialist said it expects policy decisions to be made more quickly, given the government’s massive majority following last week’s general election.

It said new starts will rise 7% next year and 6% in 2026 with project starts edging up 3% for the rest of this current year.

It added: “An easing in borrowing costs and improved economic conditions – with the UK economy forecast to grow around 0.8% in 2024 – together with greater political certainty, should help to lift investor confidence from the second half of 2024 and into next year.”

Yesterday, the ONS said construction output grew 1.9% in May after three months of decline which, coupled with the Labour landslide, has prompted many to predict that a corner for workloads had been turned.

Glenigan economic director Allan Wilen said: “No one could have predicted a landslide of such large proportions and, whilst the uncertainty during the pre-election period hinted at a slower pace of recovery, we could easily see an acceleration as the Labour government removes barriers to getting shovels in the ground from easing planning restrictions to embarking on major capital projects.”

Wilen said several areas were expected to tick up in the second half of the year. “In the private housing sector, we anticipate starts will pick up in the latter half of this year, driven by improved affordability and brighter economic prospects.

“Similarly, we’re forecasting improved activity in consumer-related verticals such as retail and hotel & leisure, as a gradual easing in price inflation is set to provide a boost to households’ spending power.”