Consultants less positive about economy than a year ago

Building’s annual Top 150 Consultants survey has revealed a drop in positivity about the general economic outlook over the past year.

Our findings, based on responses from 159 firms, show a 14 percentage point decrease in the percentage of consultants saying they are ‘positive’ about the general economic outlook year-on-year.

Much of this shift has however gone to ‘neutral’, which has increased by 10 percentage points to 64%, with a smaller five point increase in ‘negative’ from 6% to 11%.

This year 34% of consultants reported margins increasing, this is an 11 percentage point drop on the 45% reporting rises the previous year.

Similarly, the percentage of consultants reporting average operating margins of 15% or more fell from 31% to 28%. The total annual fee income increase for the Top 150 firms slowed from 11% to 8%.

Mark Cleverly, partner at CPC Project Services, says this could be in part due to the amount of downtime on projects increasing as a result of planning hurdles, section 106 agreements, funding issues or building safety approvals. “The downtime impacts on the margin,” he says.

“There is also upwards pressure on staff costs around cost of living, and employees bringing that forward to employers. Employers are having to put wages up but are maybe not able to pass those costs on to clients where they’re operating on a fixed-fee basis,” he says.

Despite the drop in optimism about the general economic outlook, when asked about expectations regarding trading conditions over the next 12 months, 45% of respondents said they expect an improvement, up from 42% a year ago.

The bulk of survey responses were submitted after the 11 June spending review, which contained bigger than expected funding announcements for affordable housing, and the publication of the industrial strategy.

A full analysis of the consultants’ views on the economy, including a ranking of consultants’ priorities for the government and full commentary on the Labour government’s performance, will also be published on Thursday.

Building’s annual Top 150 Consultants sees the largest firms ranked by UK fee income, with readers also able to sort the companies by other metrics including staff levels and offices.

We will be publishing additional top 50 ranking tables for engineers, architects, project managers and surveyors.

We also have a deep dive into the results of our sentiment survey, including firms’ economic sentiment, fee income breakdown and spending priorities, along with analysis pieces the performance of the Labour government and on efficiency savings from the application of artificial intelligence.