This week in the UK, the Chancellor of the Exchequer, Rachel Reeves, shared her Spring Forecast Statement. This is a mid-year update on the UK’s financial state. Our UK Managing Director, Brian McArdle, shared his thoughts on progress being made, and how it impacts the UK construction industry.
The Spring Forecast announcement by the Chancellor of the Exchequer, Rachel Reeves, was not another “fiscal event”, but offered an overview of the Office for Budget Responsibility’s (OBR) latest growth forecasts.
For this year, growth is now estimated to be 1.1 per cent, which is down from 1.4 per cent in the OBR’s November forecast.
Next year and 2028 are projected to be a mere 0.1 per cent uplift to 1.6 per cent from the forecast at the Autumn Budget, while 2029 and 2030’s figures were left unchanged at 1.5 per cent.
The Chancellor was keen to emphasise that GDP per capita is now set to grow more than was expected in the Budget – with growth of 5.6% over the Parliament.
Against the backdrop of a more “uncertain” world, the emphasis was on stability in public finances, investment in infrastructure and reforming the UK economy.
Investment in defence was also highlighted as vital, with the biggest uplift in sustained defence spending since the Cold War. January saw Leonardo UK selected for a £1 billion contract for new medium helicopters (NMH).
The Bank of England said in February that inflation will fall faster this year, but any protracted pressure on energy and oil prices as a result of war in the Middle East now makes this less likely.
We now await to see the "three major choices that will determine the course of our economy into the future" the Chancellor will make later this month, which will include strengthening global relationships, breaking down trade barriers, and harnessing the power of AI.
For the construction industry, there’s a mix of good and bad news here. The picture outlined by the Chancellor of potentially lower inflation would allow project and programme costs to be more viable, and points to more consistent workloads through economic stability. However, labour shortages and hesitation in the private sector, with the addition of cost pressures, continue to be major concerns that may give pause to those in the sector.
