黑洞社区

The famed economist John Kenneth Galbraith once said: 鈥楾he only function of economic forecasting is to make astrology look respectable.鈥� At this time of year, when we try to predict what will happen over the next 12 months for those operating in the built environment, I am inclined to believe he is right.

However, if 2024 was the year of political upheaval, with more than 70 elections worldwide, then next year will be the one when we see the impact of those voting decisions. The UK market is shaped by a complex interplay of political and economic factors 鈥� government policies, trade agreements and public investment, for example.

Economic stability and predictability will therefore be key to establishing confidence. Elections in Germany early in the new year will help to shape the eurozone and the Germans may well lurch politically to the right, signalling a period of isolationism which could well inhibit growth. Meanwhile the political turmoil in France can only add to the instability within the EU. In the United States, the incoming Trump regime will impact everyone, including the UK.

It is neither in Trump鈥檚 interest nor anyone else鈥檚 for him to crash the world economy

I personally think the incoming US president鈥檚 threats of huge tariffs are more bluster than reality. It is neither in his interest nor anyone else鈥檚 for him to crash the world economy. China and India are both struggling to maintain the stunning growth they have generated in the past and a tit for tat hissing contest will harm everyone.

Ironically, this may mean that investors see the more stable UK as a safe haven. With an established and steady government in place, a plan to build 1.5 million houses, investment in green energy and a new infrastructure fund, we may well be viewed as a better bet by those who deserted us post Brexit.

Indeed, industry data specialist Glenigan is forecasting an 8% hike in underlying starts in 2025 compared with this year, and a further 10% rise in 2026, suggesting that they think the UK construction sector at least may be on track for growth 鈥� if it can navigate the other external factors at play.

Key issues that will dominate boardroom discussions in the UK built environment during the next year will most likely include economic growth, interest rates, inflation, labour market conditions, housing demand, infrastructure plans and technological advancements that could further influence the sector. Predictions from the Office for National Statistics (ONS) on the wider economy, made after the Budget, would seem counter to Glenigan鈥檚 optimism for our sector, suggesting that 2025 will be anaemic as far as growth is concerned. I would tend to concur with the ONS view, seeing the national insurance hikes and rise in minimum wage suck all the spirit from our wealth makers in spite of ring-fenced spending on infra.

We all now see our cost base rising and customer demand likely to drop. This is exacerbated by 9.2 million economically inactive people 鈥� that is one in seven adults aged under 65, meaning stimulating growth and increasing productivity will be big issues for 2025.

It is ironic that, in spite of so many stay-at-home potential workers, the construction industry has faced a long-standing skills shortage, a challenge exacerbated by Brexit and the covid-19 pandemic. In 2025, this issue is likely to persist. The number of construction workers in the UK has fallen by 14% to 2.1 million since 2019, official data published this year shows.

Most worrying for those of us working in the built environment in 2025 could be the instincts of a Labour government to become more involved in how we work, where we work and what we do

More generally, the interlinked subjects of interest rates and inflation are both influenced by energy costs. Key to stabilising those is the war in Ukraine which, I believe, will most likely end in 2025 with a necessary peace forced on both sides by the US that satisfies few. As a result of this 鈥� and broader global upheaval 鈥� at best we can expect to see inflation flatline and interest rates gradually decline, but at a slower rate than hoped.

Housing demand will continue to grow, but the government will see its fantasy target of 1.5 million new houses in five years revised 鈥� if not next year, almost certainly at some point. You cannot build without giving much more resource to local authorities and an enhanced, better trained, labour force.

Technology will continue to transform the construction industry in 2025, driving efficiency, safety and innovation. The growth of artificial intelligence (AI) and machine learning is exponential.

We will see AI-powered tools continue to extend its influence on optimising project scheduling, predictive maintenance and risk assessment while becoming more and more involved in decision-making. More drones will be used for site surveys, monitoring progress and ensuring safety compliance as their cost drops. Finally, we will see greater use of 3D printing, offering faster production times, lower costs and less material waste.

Most worrying for those of us working in the built environment in 2025 could be the instincts of a Labour government to become more involved in how we work, where we work and what we do. State intervention and the construction sector have never been good bedfellows and the impact of Grenfell, the green agenda and a mistaken perception that 鈥� like the farmers 鈥� we are reactionary and conservative in our attitudes and politics could make for a challenging 2025.

Richard Steer is chair of Gleeds Worldwide and a 黑洞社区 The Future Think Tank commissioner