Construction stuck in contraction, needs Budget boost

Atul Kariya, head of construction and real estate at MHA, comments on today’s S&P construction PMI data, which saw a slight uptick.

The slight uptick in construction PMI is positive news but activity still remains firmly in contraction territory. The uncertainty surrounding the Budget and the continued delays in Gateway 2 approvals are compounding the challenges that the sector is facing.

Undeniably, fire safety is paramount, but the current approach to Gateway 2 and 3 approvals is unduly complex and slow. It is disproportionately impacting the commencement of inner-city schemes where housing demand is highest. At a time when the industry could do without any delays to project starts, could the Gateway 2 approval process be made easier and more risk-based towards fire safety elements rather than across the entire scheme.   

The announcements earlier this year around accelerated planning reform and new towns has come as welcome news, but there is a level of skepticism across the sector. They’ve heard promises from the government before without the necessary delivery. The industry cannot afford to wait for a potential uptick in activity until sometime in the middle of next year.

The Chancellor must use the upcoming Budget to introduce immediate, practical stimulus for housebuilders. The recent announcements in Ireland provide a good blueprint.