The long-term implications of the Iran war is sitting heavy on the minds of the construction industry, with concerns over rising prices and commodity shortages, according to Gleeds.
The property and construction consultancy’s latest market report finds that global conflicts have overtaken interest rates and inflation as the primary threat to the industry this quarter.
Respondents warned of tightening supply chains, cost spikes and a deteriorating economic outlook, highlighting the damaging knock-on effects that the increase in oil prices will have, particularly for those engaged in plant and energy heavy trades.
Almost 50% of respondents said they had turned down a tender opportunity in Q1, signalling a reluctance to take on risk in an increasingly uncertain environment. A further 57% reported that contractors had become more risk averse, with many citing volatile input costs and concerns about a potential global downturn.
Andy Ellis, UK managing director at Gleeds, said: “The conflict in Iran is already affecting construction costs and confidence, with the sector particularly vulnerable if prices continue to rise and we experience a slump in demand.
“Contractors are stepping back from risk, clients are seeing reduced appetite to tender, and the market is becoming more cautious. We expect to see greater use of fluctuation clauses and more defensive commercial strategies as volatility persists.”
The report also highlighted frustration with a lack of clear government direction, with 60% of respondents saying the Chancellor’s spring statement failed to provide cause for optimism.
When asked what would help stimulate hiring, 22% pointed to reversing the rise in Employers’ National Insurance Contributions, while others called for increased investment in skills (21%) and better promotion of construction careers (34%).
Image credit: Skorzewiak/Shutterstock
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