Budget speculation has put industry in ‘limbo’, Core Five warns

Core Five has said next month’s Budget has put the construction industry “in a sort of limbo” with developers delaying decisions until details of chancellor Rachel Reeves’ statement become known.

In its latest quarterly update, the London QS said: “UK construction is in a sort of limbo. The 26 November Budget is an excuse to delay making decisions – an excuse that may be entirely rational as businesses await more policy certainty.”

It added that construction’s anaemic growth – the latest ONS figures showed output rose just 0.3% over the three summer months – may see government “spurred on to go harder and faster on reform to remove barriers and unlock building”.

>> See also: Building Safety Regulator spells out timetable to clear gateway 2 backlog first announced at Building the Future conference

Core Five said getting gateway 2 sign-off for high-rise residential schemes above 18m continued to be a key factor in putting the brakes on growth.

“The BSA [Building Safety Act] has had a significant impact on the market, most obviously in the dramatic decline of residential building in London.

“Gateway 2 approvals are taking much longer than expected causing significant programme delays and, critically, significant uncertainty which deters investment. Investors are focusing not only on compliance but future proofing, for example, adding safety features even in buildings below 18m. The inconsistent application of BSR reviews is prompting a cautious ‘belt and braces’ approaches.”

The firm said its tender price index forecast for the final quarter of this year remained unchanged at 3% for mainstream projects and 3.5% for major projects.

Meanwhile, in a note this morning on the housing sector, broker Investec echoed Core Five’s concern about the Budget having a negative impact on activity. It said: “The autumn selling season [is] looking subdued. It seems that much is on hold ahead of the Budget.”