Rising costs forecasted ahead

Despite the budget announcement sounding promising for the construction industry, the UK sector  is braced for increasing costs with the prospect of higher employer National Insurance Contributions (NICs) and rising building costs – based on predictions from leading analysts.

Increased employer NICs, taking effect in April 2025, are expected to push construction costs up by an estimated 0.75%–1%. This is estimated by a Market View report from Engineering consultancy Arcadis. The report highlights the challenges posed by stubborn inflation, escalating costs and regulatory complexities and predicts full recovery is now anticipated in 2026, later than previously forecast.

Furthermore, analysts at Building Cost Information Service (BCIS) predict building costs will increase by 17% over the next five years, while tender prices will rise by 19% over the same period.

Callum Thompson, BEC, said: “The construction industry is poised for growth in the coming years with the Labour party prioritising infrastructure development. This will create jobs and foster innovation in the sector. However, the growth comes with increased costs fueled by the increased NIC contributions and rising costs, making construction companies reassess  their finances.”

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