Following the disruption from Brexit and the COVID-19 pandemic over the last few years, the construction industry is hoping for a brighter year in 2023, with fewer barriers and more opportunities for business growth.

The ongoing supply chain issues have caused severe project delays and employment changes due to Brexit have also been significant challenges for construction companies to overcome, with the loss of high volumes of EU workers. Over a quarter of the EU-born construction workforce has been lost due to the points-based immigration system that has resulted in recruitment problems and an increase in complex and time-consuming administration work. Learn more about the impact of Brexit on the construction industry here.

In addition to these problems, the construction industry has been hit with the same rising material costs that are affecting many other industries, as the cost-of-living crisis continues and fuel and energy prices are soaring.

Future challenges facing the construction industry in 2023

Supply chain issues are still expected to be problematic in 2023, with logistics experts and other industry professionals expecting the disruption to global supply chains to continue into the new year.

The carbon net zero target requirements will bring further challenges for many construction firms, with large UK companies already required to include UK energy use and carbon emissions in their Directors’ Report. In 2023 and the years to follow, more requirements will be introduced in the lead up to hitting the government’s carbon net zero targets. Read more information here on the latest trends in green construction.

The housing market unpredictability

The residential housing construction demand is difficult to forecast, due to the expected slowdown in UK house price inflation that could affect the market.

Private housing repairs and maintenance work is not looking very optimistic, with activity predicted to fall by 3% by the end of 2022 and 4% in 2023. This is the UK’s third largest sector, accounting for a large proportion of construction projects.

Infrastructure growth in 2023

There is some good news for the construction industry, as the building of new factories and warehouses in the UK is expected to drive construction output, with infrastructure driving growth of around 3.8% in 2023, according to the trade body Construction Product Association.

Long-term work projects in regulated sectors such as rail, road, water and electricity are also expected to help drive growth in the construction sector in 2023 and beyond.

Which companies will be hit the hardest?

SMEs are most likely to be affected by the new challenges and changing landscape of the work pipelines in 2023. With consumers expected to be more hesitant in entering contracts without a definite end price, the small and medium-sized companies may struggle more than the larger companies who have stronger financial leverage and more diverse portfolios.

For construction companies to navigate the upcoming challenges such as the carbon net zero targets, applying the circular economy approach will be hugely beneficial. By reusing and recycling all materials, construction firms can reduce costs while also driving down their emissions.

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