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Election jitters impact number of construction contracts

15 June 2017 | By James Kenny

Construction contract values fell to their lowest for more than three years in May due to worries over the UK election.

According to the latest edition of the Economic & Construction Market Review from industry analyst Barbour ABI, £4.9bn worth of construction contracts were commissioned in May, a £500m decrease on the previous month and a noteworthy £1.5bn drop when compared to May 2016.

Looking at construction across the UK, the South West led with 18% of the UK’s construction contract value, largely thanks to a £400m mechanical and engineering contract at the Hinckley Point nuclear plant project based in Somerset, which was awarded to Balfour Beatty.

Interestingly London, which usually sits firmly at the top of the regional rankings for market share, only accumulated 9% of the UK’s total construction contract value in May, with five regions contributing more value than the capital. 

Looking across the sectors, only residential and education saw construction contract values increase in May compared to April - both increases were only minimal though at 1.9 and 0.9% respectively. The remaining sectors all saw decreases with Infrastructure hit hardest, falling by 22% on the month and by almost 40% compared to 12 months ago.

Outside of the Hinkley Point contract, some of the biggest projects awarded in May include: £300m Blyth offshore wind farm in Northumberland; £130m halls of residence at the University of Hull; and the luxury Vincent Tower hotel in Liverpool valued at £70m.

Commenting on the figures, Michael Dall, lead economist at Barbour ABI, said: “While the pre-election jitters will have no doubt affected these recent figures, many of the sectors – such as infrastructure and medical & health – have been performing below par for some time now, with the industry being too heavily reliant on residential building performing strongly each month.”

“What also stood out in May was the lack of major projects awarded in London, which saw a big drop in its construction contract value contribution in May, down to 9%. The biggest projects on the month were spread sparingly across the country and with London’s modest contribution, its clear this held back the figures last month.”

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