Construction industry braces for higher financial strain

Despite the promising budget announcement for the construction industry, the construction sector may face growing financial pains due to high employer National Insurance Contributions (NICs) and rising building costs, notes energy litigation experts – Energy Solicitors Limited.

Construction costs are predicted to increase by an estimated 0.75%–1% due to the higher employer NICs taking effect in April 2025. This is according to a Market View report from Engineering consultancy Arcadis. The report highlights further challenges in 2025 for the construction sector posed by stubborn inflation, escalating costs and regulatory complexities, with recovery anticipated in 2026 - later than previously forecast.

Furthermore, a rise of 17% in building costs and  19% increase in tender prices is predicted over the next five years by analysts at Building Cost Information Service (BCIS). 

Energy Solicitors Limited understands the volatile nature of the construction sector. Victoria Myers Senior Partner at Energy Solicitors Limited, said: “While the Labour party’s priority on infrastructure development has a promising outlook for job creation and innovation in the construction sector,  construction companies are reassessing  their finances due to the increased NIC contributions and rising costs. We can help construction companies ease financial pressures by holding energy brokers who may mis-sell energy contracts by holding them accountable and recovering the funds.”

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