NEW research has warned that the UK’s post-Covid ‘green recovery’ could be threatened by supply chain ‘fragility’ and cost pressures.
Turner & Townsend said that embedding sustainability strategies will be ‘critical’ to strengthening the supply chain and achieving the country’s net zero targets.
The firm’s latest UK Market Intelligence Report (UKMI) shows a ‘cautiously positive’ outlook for the construction industry tempered by risks of inflationary pressure. However, ‘core’ to the sector’s medium and long-term success will be how it deals with the need to decarbonise and build back greener, Turner & Townsend revealed.
Looking at the residential sector, the report suggests that there will be large scale options for cost neutral net zero retrofit schemes by the end of 2023.
The UKMI also assesses the forward outlook for inflation. While there is an expected increase in construction activity this year, predicted demand is ‘not evenly spread’. High government infrastructure spending is behind Turner & Townsend’s prediction of a 1.5% increase in infrastructure tender prices in 2021. But for real estate tender prices, a 0.0 percent inflation rate is expected as new orders remain weaker.
Paul Connolly, UK MD of cost management at Turner & Townsend, said, “Construction has a vital role to play in building back the economy in 2021, but its ability to deliver is threatened by the fragility of the supply chain and cost pressures as we move into the next phase of the recovery. Addressing the latter goes hand in hand with how we face up to the looming threat of the climate emergency.
“If a crucial tipping point on cost can be reached by the residential sector as early as 2023, it could pave the way for the wider real estate industry to follow. But to achieve this, industry must act now to uphold its part of the bargain and break its low margin, low investment cycle and change how it builds capability. We need to embed net zero throughout the supply chain, accelerate investment and innovation and scale up sustainable products procurement and processes so we can deliver a UK fit for a greener future.”
