UK Construction saw an 11.1bn fall in spending in 2023
Contents |
[edit] UK construction in 2023
- Spending on construction projects fell 14% in 2023
- Sectors most affected by the cost-of-living crisis were hardest hit including residential, commercial and hotel & leisure developments
- Infrastructure remains a crutch for the industry, maintaining spending 47% higher than in pre-pandemic levels.
Contracts Awarded for construction projects in the UK fell £11.1bn to £69.2bn in 2023, a 14% reduction from a record £80.4bn in 2022, according to the latest analysis from construction analysts Barbour ABI.
Sectors hit by the cost-of-living crisis were particularly affected with residential housebuilding down 14%, commercial developments down 15% and Hotel and Leisure falling dramatically by 29%.
A lack of confidence in the market was also reflected in applications for new construction projects, which fell by 16% to under £100bn. Housing applications are now 21% down on pre-pandemic levels.
Barbour Consulting Economist Kelly Forrest commented: “2023 was challenging for the UK construction sector. In addition to viability challenges from higher construction costs and borrowing rates, consumers and business confidence remained weak.
[edit] The positives from the year
2023’s good news stories were largely confined to the public sector as the government’s flagship school and hospital building programmes finally started to build some momentum amid moderating cost inflation and mounting political pressure.”
Barbour ABI found that education awards bounced back to £6.1bn in 2023, a 20% uplift compared with 2022, and a 19% increase from 2019. Meanwhile, Healthcare beat 2022 by 4% and is now 160% higher than pre-pandemic levels.
Forrest continued: “Overall weakness concealed pockets of buoyant sub-sector activity. Energy was a particular bright spot as investment poured into energy from waste and energy storage facilities, along with offshore wind.”
[edit] Infrastructure projects
Infrastructure spending, including government-funded projects, remained an important crutch for the industry in 2023. Contract awards fell 22% to £15.2bn but remained 47% higher than in 2019.
Energy projects were a big driver. Windfarms, battery storage facilities and large waste-to-energy contracts all helped maintain awards momentum.
[edit] Looking toward 2024
Meanwhile, applications remained 62% higher than pre-pandemic levels and analysis of demand side approvals, still double pre-pandemic levels, suggests infrastructure will continue to perform in 2024.
Looking ahead Forrest concluded:
“In early 2024 there are a few reasons to be optimistic. Interest rates are likely to have peaked and inflationary pressures have eased markedly. Entering what is very likely to be an election year there is a risk there will be a hiatus in public sector investment as key decisions are postponed. The speed and resilience of the private sector recovery will be pivotal.”
[edit] Related articles on Designing Buildings
- 2023 Spring Budget summary and industry response.
- 2023 Quarter 1 ends on a high with 7bn in construction contracts awarded in March.
- 2023 Spring Budget summary and industry response.
- A second spring budget of 2023.
- Chancellor's 2022 Autumn statement industry response.
- Construction organisations and strategy.
- CIBSE Case Study Bushbury Hill Primary School.
- Economic development and construction.
- Education and Health applications shine in subdued construction October market.
- Funding options for building developments.
- How does the state of the economy influence the construction industry?
- Investment.
- Priority School Building Programme PSBP.
- Property development finance.
- Working capital.
Featured articles and news
Design and construction industry podcasts
Professional development, practice, the pandemic, platforms and podcasts. Have we missed anything?
C20 Society; Buildings at Risk List 2025
10 more buildings published with updates on the past decade of buildings featured.
Boiler Upgrade Scheme and certifications consultation
Summary of government consultation, closing 11 June 2025.
Deputy editor of AT, Tim Fraser, discusses the newly formed society with its current chair, Chris Halligan MCIAT.
Barratt Lo-E passivhaus standard homes planned enmasse
With an initial 728 Lo-E homes across two sites and many more planned for the future.
Government urged to uphold Warm Homes commitment
ECA and industry bodies write to Government concerning its 13.2 billion Warm Homes manifesto commitment.
From project managers to rising stars, sustainability pioneers and more.
Places of Worship in Britain and Ireland, 1929-1990. Book review.
The emancipation of women in art.
Call for independent National Grenfell oversight mechanism
MHCLG share findings of Building Safety Inquiry in letter to Secretary of State and Minister for Building Safety.
The Architectural Technology Awards
AT Awards now open for this the sixth decade of CIAT.
50th Golden anniversary ECA Edmundson awards
Deadline for submissions Friday 30 May 2025.
The benefits of precast, off-site foundation systems
Top ten benefits of this notable innovation.
Encouraging individuals to take action saving water at home, work, and in their communities.
Takes a community to support mental health and wellbeing
The why of becoming a Mental Health Instructor explained.
Mental health awareness week 13-18 May
The theme is communities, they can provide a sense of belonging, safety, support in hard times, and a sense purpose.
Mental health support on the rise but workers still struggling
CIOB Understanding Mental Health in the Built Environment 2025 shows.
Design and construction material libraries
Material, sample, product or detail libraries a key component of any architectural design practice.