Firm predicts national rise of 4.5% this year, with this easing to 4% by 2017

Mace expects UK tender price inflation to remain at 4.5% this year and at 5.5% in London, according to its latest set of forecasts.

Mace set its tender price forecasts for the UK and London for the next two years at 4% in 2016 and 2017 nationally, and 4% and 3.5% in London respectively.

Mace cost consultancy managing director Chris Goldthorpe said margins continue to be the main driver behind tender price increases, as input cost inflation was subdued.

He added: “The growth of the construction industry in London is well established and the market is stabilising, although complex or bespoke projects are still attracting a premium.

“We are now seeing a similar pattern developing in other regions where supply-chain constraints and risk aversion has led to reduced competition, particularly for major projects, where the choice of procurement method is critical to achieving value for the client.”

Mace added that the result of May 7’s General Election could have a short-term effect on financial markets, particularly if the outcome is a coalition.