Project starts plummet by half in last three months

Project starts fell by almost half in the past three months, according to new research from Glenigan.

The company’s latest Construction Review, covering the three months to the end of January, says starts onsite fell by 47 per cent compared with the previous three-month period and stood a third lower than in the same period a year earlier.

The drop in work commencing was particularly large for projects worth £100m or more, which fell by almost two-thirds (64 per cent). Meanwhile, starts on projects worth less than £100m fell by 20 per cent on a seasonally adjusted basis.

The gloomy picture extends to other important sector metrics. Main contract awards fell by 21 per cent in the review period, while detailed planning approvals were down by 17 per cent.

Glenigan said the weak performance was mainly down to “sustained external pressures” on the UK construction industry. Alongside rising interest rates, materials prices and energy costs, the company laid some of the blame on “decisions taken by the UK government in the latter half of 2022”, which caused economic upheaval and ultimately led to a recession.

The North East and South East were the only UK regions to perform well compared with the previous quarter, with project starts increasing by 20 and 19 per cent respectively.

Commenting on the findings, Glenigan economic director Allan Wilen said that amid continuing global and national disruption, “we’ll likely see contractors adopting a cautious and retrenched approach, pushing back start dates until the economic landscape looks less hostile”.

Rising mortgage rates, falling real wages and low consumer confidence were “likely to cause a further downturn in activity”, he warned. Wilen also pointed out that many professionals were still getting to grips with new regulations, which he expected to “set back residential starts for the foreseeable future”.

More positively, he added that government investment in multibillion-pound projects such as HS2, Hinkley Point C, and long-term frameworks for roads and energy, provides some grounds for optimism.