Construction activity shows regional disparities

Analysis conducted by Barbour ABI and the Construction Products Association (CPA) has revealed that construction spending is seeing a geographic shift as the industry recovers following the post-pandemic period and the infamous Liz Truss mini-budget.

Comparing ONS figures from 2022 with contract awards data from 2023, researchers discovered spending shifting away from traditional construction powerhouses, such as  London and the Southeast, with new hotspots in construction activity appearing all over Great Britain.

Ed Griffiths, Barbour ABI’s Head of Business and Client Analytics, explained: “There are clear hotspots for upcoming construction activity over the next six to 24 months, with hotspots outnumbering coldspots, where activity has gone down, by almost three-to-one overall and six-to-one for infrastructure.

“Encouragingly, regions with hotspots were spread across Great Britain and hotspots outnumbered coldspots in all regions of Great Britain.”

London and the Southeast, which have seen the highest spending on construction in the UK, saw contract awards reduce by 18.5% and 17.6% respectively – wiping out gains made in 2022. Westminster, traditionally responsible for one of London's biggest spending shares, took a 20% hit along with Berkshire (39%), and West Surrey (32%) in the Southeast.

Meanwhile, Manchester was in the top 10 largest regions in terms of the value of contracts awarded in 2023. However, this was 18% lower than a year earlier.

Analysts found contract awards growth of 7.9% in the East of England, with the Cambridge, Suffolk, and Essex regions all registering double or triple digit increases. Yorkshire and the Humber also registered a 0.8% increase, with Leeds a notable hotspot seeing a 23.7% increase, and Lincolnshire enjoying a 159.1% increase.

Perhaps the most interesting figures come from Scotland, which saw a 32% increase in contract awards. The Scottish Boarders, in particular, recorded the highest increase in the UK at 374.3%, while activity in Glasgow rose by 30%.

“Overall contract awards remained stable at a national level, but looking at a more granular level reveals stark differences in regional performance with growth rates ranging between +374% and -95%", Griffiths continued.

“What we can say is that the post-pandemic boom initially focused on London and the Southeast is finally showing signs of trickling out to the rest of the UK.

“This will come as a relief for more regionally focused businesses and a signal to contractors that it may be time to start looking outside of the big powerhouse areas for more projects to add to their pipeline.”

Overall, the report found 82 construction hotspots in the UK compared to just 31 coldspots, with 29 hotspots related to infrastructure projects.