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Middle East Conflict Fuels Fears Of Price Rises, Finds Gleeds Report

The latest Market Report from international property and construction consultancy Gleeds, published this week, has revealed that more than half of those quizzed expect raw material prices to rise due to supply risks resulting from the conflict in Gaza and the ongoing war in Ukraine.

Pressure is mounting as Houthi activity in the Red Sea, increased shipping costs and delays arising from reroutes around the Cape of Good Hope have led some Asian steelmakers to withdraw from the European market.

Global tensions are now considered to be one of the biggest threats to the construction industry in the UK,  behind interest rates, inflation and flagging investor confidence.

Over 80% of all those quizzed said that high inflation was heavily impacting the viability of schemes, with 88% of contractors claiming that either they or their supply chain had declined a tender due to an untenable risk profile or lack of capacity over the preceding quarter.

The consultancy’s report also found that 54% of contractors questioned had been involved with projects impacted by insolvency in the past three months, which will come as little surprise to many given the release of figures showing an average of nearly a dozen construction firms a day went bust in the year to November. 

An underwhelming Autumn Statement did little to improve the outlook, with just 12% reporting that the Chancellor had increased their confidence in the government’s ability to grow the economy.

As a result, the survey showed a further shift in favour of a Labour victory at the coming General Election, with just under three-quarters now predicting that Keir Starmer’s party will come out on top. Labour shortages and the skills gap were flagged as the number one issues for leadership to address, followed by an enhanced focus on net zero construction and retrofitting, and delivery of more affordable housing. 

Commenting on the latest findings, Gleeds CEO Graham Harle said: “Global instability continues to add fuel to the fire of uncertainty in the UK construction sector.

“Our report shows that projects are being negatively impacted by an increasing number of insolvencies and over 90% of contractors tell us they’ve experienced disputes or claims during contract works on one or more schemes in the last five years.

“These are trying times, but I remain confident that the industry is resilient enough to weather the storm.” 

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