International Conflicts Fuels Price Rise Fears

EXPECTATIONS that raw material prices will rise due to supply risks from international conflicts are mounting.

Pressure from the conflict in Gaza, the ongoing war in Ukraine, Houthi activity in the Red Sea, and complex international trade challenges like EORI number regulations are leading to the concerns. They are expected to contribute to shortages and increased costs from rising shipping prices and delays from reroutes around the Cape of Good Hope, according to the latest research from international property and construction consultancy Gleeds.

Price Rise Fears

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 already heavily impacting the viability of schemes. Now, 88% of contractors claim that either they or their supply chain had declined a tender due to an untenable risk profile or lack of capacity in 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. This may come as little surprise given an average of nearly a dozen construction firms a day went bust in the year to November 2023.

An underwhelming Autumn Statement did little to improve the outlook. Just 12% reported that the Chancellor has 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. Just under three-quarters are 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. This is followed by an enhanced focus on net zero construction and retrofitting, and delivery of more affordable housing.

Gleeds’ Market Report surveyed contractors from 7 December – 16 January with 173 respondents replying.

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