Scotland’s Construction & Building Sector 2023
The news headlines did not make for easy reading over much of last year. As an integral part of the national economy, the Scottish Construction Industry was not immune to the political and economic turmoil that persisted throughout the year. Despite this, the demand for construction & building services remained strong and we start 2023 with a lot to potentially look forward to.
That may, on the face of it, appear an odd statement to make amid negative GDP growth and reports of still eye-watering levels of inflation (and it would be foolish to ignore the risks these factors present). However, many of our clients in the construction sector have admitted that their services have often been oversubscribed in the last 12 months leading to challenges in how they organise and resource work whilst delivering the quality of product they’ve built their reputations on. For some, a slowdown in activity could prove a well-needed correction in the market. Providing that slowdown does not tip too far in the wrong direction, it could create a little breathing space allowing more businesses to operate on a more sustainable footing in 2023.
The fit-out and refurb specialists saw an abundance of opportunity through much of 2022 and were arguably more prone to some of the pressures outlined above. Most continue to report healthy order books for 2023 as their predominately commercial client base continues to repurpose and refresh their property portfolios. Providing such investment continues to produce a healthy return there’s no reason to believe this will halt any time soon.
The retail market has performed strongly in recent years but given the continued strain on household finances, there are arguably some legitimate question marks over how the sector will perform this year. For now, most of our clients operating in this space report healthy pipelines of work – perhaps with some re-ordering of priorities in some cases but in others, particularly budget retailers, there is a desire to invest aggressively which will create opportunity.
Investment decisions in the public sector for larger projects have often proven to be drawn out as material cost hikes saw project estimates spiral, leading many to rethink their plans. It has left many Main Contractors in an, at times, uncertain space, never quite knowing what is going to start and when. However, it does appear that 2023 and 2024 could prove to be bumper years for new major projects coming to fruition. Major new prisons, hospitals and education buildings from the borders to the Highlands should hit site, creating a hive of activity across the country.
Assuming relatively few undue delays in commencement dates, this bounty of work will represent billions of pounds of investment over the next few years, creating myriad opportunities for the construction supply chain in Scotland. In tough economic times, there is a need for the public sector to provide stimulus for economic activity and with this level of investment pretty much set to go, it is important local and national government does not get tangled in further indecision.
There will be more to follow from us throughout the year on the various trends and opportunities that exist within the construction industry and what we are doing to provide effective support where it’s needed. For now though, I hope you will agree, there’s plenty of cause for optimism as we start the year.
We’d love to hear from you if agree or disagree with our analysis – we are always keen to add more to our understanding. Furthermore, if you need our support for your temporary or permanent recruitment needs then our Construction & Building Division is on hand, ready to help.