Q1 2025
Tender Price Indicator
A mixed outlook of slow economic growth, inflationary pressure and shifting policy dynamics are holding back growth in the sector. Constrained supply, regulatory burdens and heightened risk aversion continue to drive tender prices in the short term.
A much-hoped-for recovery in the construction sector has been stalled by a challenging economic and political backdrop. With inflation in the economy expected to remain above target this year, interest rate reductions may proceed at a slower pace, deterring investment and delaying project pipelines. The recent decision to raise employers’ national insurance contributions (NIC) has further weighed on business confidence, adding to labour cost pressures at a time when wage growth in the industry remains above trend.
Supply chain capacity constraints, regulatory burdens and heightened risk aversion also continue to shape market dynamics. Contractors, particularly large Tier 1 contractors, remain selective in bidding, pricing in risk amid prolonged project lead times and increasing compliance requirements. While materials cost inflation remains relatively static, labour shortages and regulatory-driven overheads are keeping tender prices elevated. As a result, inflationary pressures in the sector are expected to persist.