The firm’s latest UK Market View kept the current tender price inflation forecast nationally steady at 2.5% for 2024 and 3% for 2025 and 2026. The figures for London remain at 2%, 2.5% and 3% respectively.

Market conditions are becoming slightly more favourable with material costs 2.3% down over the last year and total construction new orders higher than at the end of 2023.

Labour cost pressures continue to ease and insolvencies in Q1 were at their lowest level since the end of 2021.

But it was another challenging quarter for construction output with the industry shrinking 0.9% and pipelines remain weak. Earnings growth is lower than the average for the whole economy and vacancies remain very high with around 40% more construction vacancies than in 2019.

Mace added “indicators suggest that the policies of any new government will take time to have an effect and it would be surprising if anything fundamental changed over the coming months. However, the hope is that as we move into 2025 progress will be made.”

 Oliver North, Director of Cost and Commercial Management, UK & Europe, Mace Consult said: “The next government needs to help create the right environment for infrastructure projects to help productivity and in turn attract investment to the UK. However, long-term growth is something that the industry will need to be patient for as key metrics remain mixed.

“While the electoral outcomes domestically and overseas have the potential to impact costs and affect our industry, as a sector we are always working proactively to be ready to deliver.

“Best practices remain paramount; there needs to be close alignment between clients, consultants, contractors and subcontractors with supply chains engaged early and working collaboratively to ensure optimal outcomes.

“From a cost perspective at least, conditions do seem to be becoming slightly more favourable, albeit not enough for us to adjust our tender price outlook.”