UK Construction Output Reaches a Record Value of £204bn in 2022

Rising costs add £23bn to the cost of construction output when compared to pre-pandemic price levels; inflation pressures are expected to continue through the first half of 2023.

The Office for National Statistics (ONS) has released data on the construction output of the United Kingdom covering all 12 months of 2022 last week. The figures show that the total construction output value reached almost £205bn, marking the first-time annual construction value has surpassed £200bn and representing a 15% rise from 2021 output values in nominal terms.

Despite forecasts at the midpoint of 2022 being closer to £186bn, the new data reveals a remarkable rise in construction output value, driven by the inflationary effects of post-Covid-19 shortages, the war in Ukraine, and the cost-of-living crisis driving up energy and material prices.

Barbour ABI analysis of real versus nominal price indices showed the value would have been closer to £181bn if prices had remained at pre-pandemic levels. This means approximately £23bn has been added to the cost of UK construction since 2019. 

Barbour ABI’s AMA Research Director, Laura Pardoe, explained: “Price rises were at record levels over Summer 2022, with many goods seeing 25% annual inflation. This has now dropped closer to 15%, but some products still hover well above 20% and insulation products have recently jumped to 50%.”

Looking ahead, the UK economy is facing multiple headwinds, which could reduce the viability of many building projects.