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Turner & Townsend has revised up its tender price forecasts.

In its latest market update, the consultant now expects prices to rise 2.5% in the building sector and 4.1% in infrastructure this year, up 0.2 percentage points in both cases on its previous estimates.

Labour shortages and the weak pound are driving up prices, the firm said, offsetting ongoing uncertainty caused by Brexit and the upcoming general election.

鈥淎 solemn calm鈥� has descended over the UK since the Brexit vote 11 months ago, T&T said.

Investor caution eased over the final months of 2016, the firm reported, causing contractor order books to swell by 10.5 percentage points.

This has translated into 44% of contractors surveyed by T&T reporting that they expect market conditions to improve over the next 12 months.

Meanwhile, not a single contractor responding to T&T鈥檚 latest survey expected a fall in tender prices - with the consensus anticipating a 3.3% uplift in tender prices for the year.

However, T&T is also forecasting tender prices will fall in London as Brexit uncertainty lowers the amount of new work coming to the market, while tender prices are on the rise in Manchester where nearly 7,000 residential units are under construction and contractors are reporting that they are already operating at 86% capacity.