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Listed contractors have said scrapping the rest of HS2 will not affect their forecasts with the country鈥檚 biggest builder downplaying worries over the amount of work lost as a result of the decision.

The share prices of Balfour Beatty, Costain, Kier and Keller 鈥� which are all working on the first phase of the scheme between Curzon Street in Birmingham and London Euston 鈥� all fell slightly on the news that prime minister Rishi Sunak was pulling the plug on the line between the West Midlands and Manchester.

But Leo Quinn, chief executive of Balfour Beatty, whose jobs on the project include building the station at Old Oak Common, said: 鈥淭he HS2 announcement, whilst disappointing for our industry, has no material impact on Balfour Beatty鈥檚 order book.鈥�

He added: 鈥淐ancelling phase 2 of such a significant project as HS2 presents challenges to the ability of the industry 鈥� and the UK 鈥� to upskill, train and retain the generation of talent required to deliver the infrastructure that this country must have.鈥�

In a note, analysts at broker Liberum said: 鈥淲e think it is unlikely that the cancellation of phase 2 would impact the forecasting horizon for most of the companies in our coverage. Costain and Severfield would likely be the biggest beneficiaries of a green light on Euston. At Kier we see no risk to estimates from HS2.鈥�

Liberum said Costain and steel firm Severfield were the quoted firms which will benefit from the scheme at Euston now going ahead after speculation the railway would start and finish in London at Old Oak Common.

鈥淭he main civils contract was originally expected to be worth 拢1.2bn but, given inflation, we expect that has increased significantly,鈥� the note added.

This part of the job will be carried out by a team featuring Costain, Strabag and Skanska while Liberum said: 鈥淭he structural steel work on Euston is likely to be very significant and Severfield, as the UK鈥檚 largest structural steel provider, would be well positioned to win work there.鈥�

It said HS2 was 鈥渓ess relevant as a financial contributor鈥� to groundworks firm Keller, which has been carrying out work on the railway, and said 鈥渄elays on HS2 are unlikely to impact Kier for the next two years and we estimate that FY 23 was the peak for Kier in terms of HS2 activity鈥�.

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Liberum鈥檚 note also gave an insight into why costs have escalated so much 鈥� and explained the industry鈥檚 reluctance to take on the risk associated with a scheme like HS2.

鈥淭he problem is that inflation, which is particularly marked in building materials, is increasing the cost of the contract,鈥� it said. 鈥淒elays in an inflationary environment only increase the cost further. Given that the contract is essentially cost-plus, that increase in cost means an increase in price which is born almost entirely by the taxpayer.

鈥淭he construction industry would never have taken this open-ended risk since it simply could not have afforded the downside. And it would not have made sense for the government to award the contract as a fixed-price contract.鈥�