Firm says it is less pessimistic than it was three months ago
Mace has said the success of the UK’s vaccine rollout means it is less gloomy about 2021’s prospects that it was three months ago.
More than half of the UK’s adult population, 28 million, has received at least one dose of the vaccine with the country on track to meet its target of vaccinating its nine priority groups by its planned mid-April date.
In its first report of the year, Mace’s consultancy arm said the success of the initiative meant it was revising up its forecasts for tender prices this year.
In the final quarter of 2020, Mace had predicted prices would fall by 2.5% this year but the firm has now revised this upwards to a 1% dip.
It added: “Largely due to the success of the vaccine rollout, we have revised up our forecasts for tender prices in 2021. While conditions will remain challenging, especially in the first half, prospects have significantly improved and, as such, we are less downbeat than before.”
But it said its tender price predictions did not factor in covid-19 risks, such as programme delays and prolongation, material shortages and disputes, as “contractors [are] likely to exclude” them.
It said the second half of the year was shaping up to be a strong one for the general economy as a lockdown-weary nation prepared to go on a spending spree after months of restrictions.
It added: “A glut of savings and substantial pent-up demand from people having spent the best part of a year hiding away forced to stay indoors creates the potential for a huge increase in spending.”
But it added: “Risks also exist. At some stage the furlough scheme will come to an end, at which point unemployment, already steadily rising, could spike. Similarly, there are many firms currently reliant on government support who may come into difficulty once it is no longer available.”
It said prices for steel and timber were on the rise and warned that costs on imports could potentially increase as a six month grace period on red tape for imports following Brexit comes to an end.
From July this year, all traders importing goods from the EU will have to make full safety and security declarations at the border and pay relevant tariffs.
The report said construction was at the heart of the government’s economic revival from the ravages of covid with new hospitals, schools and infrastructure schemes promised but warned: “There are questions about whether the industry has the capacity to complete all of these projects, and a large increase in inflation may be an unfortunate side effect. New data also raises doubts about the size of the workforce and whether it can meet expectations.”