Here’s a one-page executive summary of the key points from the BCIS December 2024 Quarterly Briefing:

Market Overview & Outlook

• Tender prices rose by 0.8% in Q4 2024, resulting in annual growth of 2.3%
• Tender prices forecast to rise by 19% over the five years to Q4 2029
• Total new work output fell 2% in 2023 and expected to contract further by 4.7% in 2024
• Recovery predicted from 2025, with 21% growth forecast over 2024-2029 period

Key Cost Drivers

• Labor costs rose 5.3% in Q4 2024, forecast to grow 19% over next 5 years
• Materials costs up 1.0% in year to Q4 2024, predicted to rise 15% by Q4 2029
• Building costs increased 2.9% in year to Q4 2024, projected 17% rise over forecast period
• National Insurance increases and National Living Wage changes from April 2025 will impact costs

Sector Performance

• Private housing output down 14.3% in 2023, further 5.1% fall expected in 2024
• Infrastructure output rose 4.3% in 2023 but forecast to decline 8.9% in 2024
• Public non-housing up 11.4% in 2023, moderate 2.8% growth predicted for 2024
• Private commercial rose 6.8% in 2023 but expected to decline 2.4% in 2024

Key Risks

• Persistent skilled labor shortages continuing to impact projects
• High levels of construction industry insolvencies
• Political instability affecting government infrastructure commitments
• Middle East conflicts potentially disrupting material supplies and energy costs
• Economic drag from delayed impact of high interest rates

Economic Context

• UK GDP grew 0.1% in Q3 2024
• CPI inflation at 2.5% in Q4 2024
• Base rate at 4.75% with further cuts expected in 2025
• Sterling exchange rates: €1.20 and $1.27 (November 2024)