Consultancy, Arcadis has warned that inflation affecting infrastructure schemes in 2023 will be “much higher” compared with inflationary pressures on commercial building as the “high cost of finance for the private sector bites.”
In its Winter 2022 Market View report, Arcadis has increased its earlier forecast for infrastructure tender price inflation for 2023 from 5% to 6-7% while decreasing its forecast for building inflation to 2% from 2-3%.
It reports: “With infrastructure workload somewhat protected by continuing government investment, it is increasingly likely that price trends in commercial building and public infrastructure market will diverge, with much higher inflation affecting infrastructure schemes.” See table.
For 2024 and 2025, Arcadis anticipates that infrastructure inflation will fall to 4%, “in part reflecting the much lower levels of inflation expected in wider markets.”
But Arcadis maintains that there is still “a significant degree of uncertainty surrounding the coming 12 months.” Head of strategic research and insight at Arcadis, Simon Rawlinson, said: “With the Chancellor shielding the public sector capital programme from market effects in the short term, our forecast is subject to even higher levels of uncertainty than usual. Many sectors, including infrastructure, industrial and even non-housing repair and maintenance are entering the downturn from a position of record workload, and there is a chance that not all sectors will fall into recession.
The full UK Winter Market View is available to download HERE
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