Starts for projects valued at £100m or less fell by nearly half in the first quarter of 2023, study finds
The overall value of small project starts has plummeted over the past three months and is now nearly half what it was this time last year.
A new study by data provider Glenigan found construction starts of projects valued at £100m or less were 35% lower in March than in January, and 46% lower than 12 months ago.
It comes as worries about the economy resurface despite chancellor Jeremy Hunt confirmation last week that the UK had narrowly avoided a recession in 2022, and assurances that inflation has peaked.
Fears of another wave of construction product price inflation have been stoked by a surprise jump in oil prices announced by Opec+, the group of oil exporting countries that includes Russia and Saudi Arabia.
Glenigan’s monthly report found the value of project starts accelerating on a downhill trajectory in the first quarter of 2023.
The trend is particularly marked in residential starts valued at less than £100m, which fell by 39% to stand 51% lower than a year ago.
Social housing was the worst performing residential sector, falling by 41% since January to 52% of the value seen 12 months ago.
Non-residential starts have also taken a turn for the worse, falling by a third since the beginning of the year to stand 42% below March 2022 figures.
Industrial projects were the worst performing sector, with the value of starts halving in the first quarter and now some 64% lower than a year ago, while office projects were down 32% since January following a flurry of activity in the last quarter of 2022, and now stand at 40% lower than a year ago.
Glenigan economic director Allan Willen said the “disappointing but unsurprising” figures reflected the UK’s stagnant economic situation.
“Despite the chancellor’s confirmation that we are not entering a recession in last month’s Budget, the UK economic outlook remains weak,” he said.
“Investor and consumer confidence is at a low ebb which has, inevitably, stalled private sector activity.”
The pattern has been replicated across the UK, with Yorkshire and the Humber seeing the steepest fall, with starts in the region down by 57% in the first quarter and 65% lower than last year.
Scotland, the North East and the South East also saw sharp drops in project start values in the past three months, while London’s figures saw a slightly shorter drop of 28%.
The study comes after official planning statistics showed both major and minor planning permissions for the calendar year of 2022 were the lowest for a decade.
The figures showed the proportion of major decisions being approved slipping below 80% for the first time in almost eight years, with just 79% of major applications, those of more than 10 homes, permitted.
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