Concern is growing across the sector about the long-term implications of the US-Iran war, according to consultancy Gleeds’ quarterly UK market report.
It shows that global conflicts overtook interest rates and inflation as the primary threat to the industry in the first quarter of this year. Around 65% of those questioned were worried about the impact of the war on commodity shortages and price hikes.
Respondents warned of tightening supply chains, cost spikes and a deteriorating economic outlook, and 85% reported that they had declined at least one tender in the first quarter of the year. Gleeds said this showed a ‘reluctance’ to take on risk in an ‘increasingly uncertain’ environment.
A further 57% said contractors had become more risk-averse, with many citing volatile input costs and concerns about a potential global downturn.
The latest S&P Global UK Construction Purchasing Managers’ Index shows that March was the 15th consecutive month in which the sector’s output has been below 50, the benchmark indicating whether the sector is contracting or expanding.
On 30 March, the Construction Leadership Council’s Material Supply Chain Group said ‘relatively few’ construction products are at risk of availability issues ‘directly linked’ to the conflict. The main challenge is the ‘rapid’ rise in energy prices and their impact on material costs.
