黑洞社区

It is currently all too easy to feel that we are in the throes of an economic and fiscal hurricane, which makes trying to navigate one鈥檚 business feel a little like the Dutch boy who stuck his finger in the crumbling dike in the hope of preventing an oncoming flood. Lots of effort 鈥� but not sure its working.

Last week鈥檚 spring statement by the chancellor Rachel Reeves introduced a series of reforms and investments poised to significantly influence the UK鈥檚 construction and property sectors. Coupled with the imposition of new global trade tariffs by Donald Trump in the United States on Wednesday, these developments present a complex landscape for industry stakeholders and are being carefully examined in the boardrooms of developers, contractors, consultants and architects.

Understanding and navigating the interplay between domestic policy changes and international trade dynamics is essential if we are to provide direction and grasp the opportunities whilst managing the risks.

>> Also read: Chancellor鈥檚 ironclad fiscal rules are protecting construction 鈥� for now

To take the spring statement first, now that we have had a little time to digest its contents, it seems clear to me that the government鈥檚 ambitious commitment to build 1.5 million new homes by the end of this parliament is central to its re-election hopes in 2029. This initiative is underpinned by a 拢2bn investment aimed at delivering 18,000 social and affordable homes, addressing the pressing need for accessible housing across the nation.

The Office for Budget Responsibility (OBR) projects that new planning reforms will result in the construction of approximately 1.3 million homes over the next five years and that these changes will permanently increase the level of real GDP by 0.2% by 2029/30, equating to an additional 拢6.8bn for the economy.

Keir Starmer鈥檚 government is placing its future in the hands of our sector

This 拢6.8bn is core to giving Labour any chance of digging itself out of the financial car crash left by the Conservatives, the impact of Brexit and a general sense of decline. In other words, Keir Starmer鈥檚 government is placing its future in the hands of our sector.

Recognising the critical role of skilled labour in achieving these housing targets, the government has allocated 拢625m to train up to 60,000 new construction workers. This investment aims to address existing skills shortages and ensure that the industry has the workforce necessary to meet increased demand.

Here they may well have a challenge. As long as I have been working in the built environment, labour and skills issues have been a paramount concern. With around 450,000 vacancies due to natural wastage, retirements and Brexit, the 60,000 new workers will scarcely scratch the surface, even if they all arrive. Until AI learns to lay bricks or fix the plumbing, the labour targets look ambitious.

The second huge fiscal event came this week in a move that has sent ripples through global markets. On Wednesday night, Trump announced sweeping trade tariffs, including a 10% levy on all UK imports to the US. While the UK fared better than the European Union, which faces a 20% tariff, the implications for the UK economy, and specifically the construction sector, are considerable.

The construction industry relies heavily on materials such as steel and aluminium, which are integral to infrastructure projects. Tariffs on these materials can lead to increased costs, affecting project budgets and timelines.

The juxtaposition of the UK鈥檚 domestic policy initiatives and the evolving international trade environment presents a multifaceted scenario for the construction and property sectors

Jim Coleman, head of economics at WSP, highlighted that such tariffs could 鈥渞ipple through downstream manufacturing activity鈥�, potentially delaying schedules and elevating financial pressures on large-scale projects.

Furthermore, the broader economic impact of these tariffs may influence interest rates and inflation. Anticipated inflation could prompt the Bank of England to adjust its base rate, affecting borrowing costs for both developers and consumers. Higher mortgage rates may dampen housing demand, posing additional challenges to the government鈥檚  building targets.

The juxtaposition of the UK鈥檚 domestic policy initiatives and the evolving international trade environment presents a multifaceted scenario for the construction and property sectors. On one hand, the government鈥檚 proactive measures in housing and planning signal a strong commitment to stimulating growth and addressing housing shortages. On the other, external factors such as trade tariffs introduce variables that could well complicate these efforts.

>> Also read: We urgently need a government that can stoke industry optimism

>> Also read: In 2025 we will see the economic consequences of 2024鈥檚 political decisions

So, what next? Putting fingers in ears and humming loudly hoping it will all go away is not really a credible management strategy. No, operating in the built environment is all about adapting to change.

We must adopt a strategic approach to navigate this landscape. Embracing innovation and efficiency in construction practices can help to mitigate the rising material costs. Additionally, diversifying supply chains and exploring alternative materials may reduce dependency on imports subject to tariffs.

The sector can navigate these challenges and contribute meaningfully to the UK鈥檚 economic prosperity, but it won鈥檛 be easy

Collaboration between the government and the private sector will be crucial in overcoming these challenges. I was pleased to see the prime minister invite industrialists and business people for a meeting after Trump announced his tariffs. It is however a pity there were not many in attendance from the sector on which he is hoping to get his 拢6.8bn building uplift.

Policymakers should remain responsive to the industry鈥檚 needs, potentially offering support mechanisms to offset the impact of tariffs. Simultaneously, the industry must proactively engage with training initiatives to build a robust workforce capable of delivering on the nation鈥檚 housing ambitions.

The spring statement laid a solid foundation for growth within the UK鈥檚 construction and property sectors, with substantial investments and policy reforms aimed at accelerating housing development. However, the introduction of US trade tariffs adds a layer of complexity that cannot be overlooked.

Success in this environment will depend on our industry鈥檚 ability to adapt to external pressures while capitalising on domestic opportunities. Through strategic planning, innovation and collaboration, the sector can navigate these challenges and contribute meaningfully to the UK鈥檚 economic prosperity, but it won鈥檛 be easy 鈥� as the little boy who tried to block the dike found.

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