The last few years have not been easy but we will have to wait a little longer before the outlook starts to improve, writes Richard Steer
Before embarking on this year’s crystal-ball gazing, I took a minute to revisit my predictions from last year and gauge their accuracy. It has been a dispiriting odyssey of discovery.
It seems that at this time last year I was a little downbeat, saying “[In 2023] I see an unwanted cocktail of prolonged, weak, growth set against supply-chain challenges, as industrial action impacts transport, logistics and the service sector. We may see inflation peak and fall, but this will take some time to feed into the system.”
Oh dear… It seems my gloomy forecast was not too far off, evidenced by the cancellation of HS2, worsening cost-of-living crisis, rampant interest rate rises and subsequent softening of the housing sector, which is only just starting to return.
>> Also read: Richard’s predictions for this year – If last year was a challenge, I’m afraid 2023 doesn’t look any easier
Looking ahead I am afraid I am not much more optimistic, fearing that 2024 will be seen as the lost year – marked by an immobile government, fearing an election which many Conservatives seem to think they are likely to lose. Hence, like a rabbit caught in the headlights, they prefer to delay and dither rather than make decisions that will move our sector forward.
I do predict with some certainty that technology will have a greater impact on – and interface with – all of us
It has to be noted that the UK is not alone in suffering election paralysis. In 2024 more than 70 elections are due to take place in countries around the world which are home to 4.2 billion people, more than half the global population.
More positively, I do predict with some certainty that technology will have a greater impact on – and interface with – all of us. It will increasingly influence how we work, where we work and how many people we actually require to do that work.
This techno revolution will not be brought anywhere near to a conclusion in the next 12 months, but we are now on an artificial intelligence (AI) driven exponential roller-coaster which only really started in earnest last year. So I anticipate that it will only gain momentum over the next 12 months.
My assertion is of course grounded in immutable facts. If we take the AI tool Chat GPT, for instance. It was launched on 30 November 2022 and, by April 2023, it had 173 million users interrogating it 60 million times every single day – and this is growing.
Having reached 100 million users in two months, during 2023 it became the fastest-growing digital service for consumers in history – more successful in those terms than Google or Facebook. We are in a new industrial age. In 2024 these numbers will rocket.
As well as helping those operating in the built environment to manage, connect, communicate and plan more effectively, we will see this technology used in both the UK and US elections in 2024. Politicians will adopt it to challenge, measure, influence and shape their campaigns.
AI will hone messaging, make it more targeted and use sophisticated algorithms to target voters. The systems developed by the Leave campaign to win the Brexit referendum will seem Neanderthal by comparison. This is not necessarily a good thing – but it is happening, whether we like it or not.
In 2024 we will continue to see the restriction of spending on long-term infrastructure projects to pay for shorter-term election incentives in terms of personal tax giveaways
In the property and construction industry, delay hits the pipeline. We need to get the election over and done with before investors, who are sitting on their chequebooks, start splashing the cash. Unfortunately, I don’t see a vote happening at the front end of 2024 and this will not be good news for our sector in either the public or private realms.
The cancellation of HS2 shows the current government’s thought process. In 2024 we will continue to see the restriction of spending on long-term infrastructure projects to pay for shorter-term election incentives in terms of personal tax giveaways.
On the other hand, inflation will continue to decline, so I do not foresee further interest rate rises. But at the same time I am not envisioning large falls, so borrowing will continue to be expensive.
Sadly, the UK looks like it will bounce along at the bottom of the G7 in terms of economic performance while investors remain unsure which way a probable new Labour government will govern, tax, invest and grow. We will need to wait to see if the greening of homes is encouraged via tax breaks or more build to rent is promoted to alleviate the housing shortage.
Let’s face it, with only around 120,000 new homes built in 2023, 2024 will have to do better.
Our sector is a bell-weather for the rest of the economy and for 2024 I am not sensing a great deal of optimism among architects, contractors or consultants – instead the sentiment is very much one grounded in caution. It is my belief that we are entering what will amount to a lost year, as most wait to see what a new government will offer in terms of its economic policy.
In turn, any new government here will need to take account of the US elections and the current options of Donald Trump or Joe Biden do not seem to be filling anyone with enthusiasm either. This in spite of Biden’s green deal initiative providing stimulus if he remains.
So, 2024 sees us in a holding pattern, keen to land while the passengers get increasingly frustrated. That is my realistic – if not hugely optimistic – prediction for what I fear may prove to be a sub-optimal year.
Richard Steer is chairman of Gleeds Worldwide