The escalating crisis in the Middle East is a reminder that geopolitics does not stay neatly confined to one region. For the UK infrastructure sector, events thousands of miles away can very quickly affect project costs, programme certainty, supply chains and investor confidence.
This matters because infrastructure depends on long-term planning, stable delivery conditions and the confidence to invest in skills, plant, materials and capacity. When international instability drives volatility in energy markets and global shipping, those foundations come under pressure.
Most members will be unsurprised to hear that the immediate risks for UK infrastructure are centred on the energy market. Disruption around the Strait of Hormuz has threatened a major artery for global oil and gas flows, with the International Energy Agency estimating that global oil supply could plunge by 8 million barrels per day if losses are not quickly offset. The IEA and member countries have already moved to release emergency reserves to stabilise markets.
For UK contractors, higher and more volatile energy prices do not only affect fuel bills. They feed into the cost of transporting materials, manufacturing energy-intensive products, operating plant and machinery, and pricing risk into contracts. In a sector already managing razor-thin margins, that can quickly translate into delayed decisions and stalled investment.
The second risk comes through trade and logistics. Shipping disruption has intensified again, which has created severe additional pressure across global freight networks. Air freight rates have jumped by as much as 70% on some routes, while there has been a sharp rise in war-risk insurance, fuel surcharges and port disruption.
For UK infrastructure delivery, that means longer lead times, less certainty around specialist components and a greater risk of price shocks in internationally traded inputs. Even where shortages do not materialise, the uncertainty itself can be damaging. Businesses postpone investment when they cannot see where costs, demand or finance conditions are heading.
That wider confidence effect is already visible in the UK economy. Concerns stemming from the Middle East conflict have weakened sentiment in the UK property market, and business confidence will inevitably be impacted by the uncertainties involved what is an extremely complex situation, with many moving parts.
In recent days, CECA members have raised the question of how our industry should respond to the unfolding international situation, and how knock-on effects of events many thousands of miles away can impact project delivery here in the UK. So what does CECA think the UK Government needs to do, to shore up confidence, protect economic growth, and secure the economy?
First, we are calling for the Government to double down on pipeline certainty. At moments of global instability, the worst domestic response is hesitation. The updated UK Infrastructure Pipeline now covers 734 planned projects worth £718 billion over the next decade. That is welcome, but confidence will only improve if this pipeline is translated into funded, deliverable programmes that clients bring to market.
Second, we believe Government should accelerate decisions that reduce the UK’s exposure to imported fossil-fuel volatility. That means moving faster on grid reinforcement, energy networks, water resilience, transport upgrades and the wider infrastructure needed to support growth and energy security. Ofgem has already set out a pathway to unlock £28 billions of upfront network investment, rising to an estimated £90 billion by 2031.
Finally, CECA is working with industry bodies and other partners to ensure the UK uses this period to strengthen commercial confidence. Much of this work has been already underway, but the new volatility of the global economy means that faster consenting, consistent procurement, prompt payment, and a clear commitment to eradicating stop-start decision-making in infrastructure delivery are all more important than ever. Recent moves towards planning reform and procurement payment transparency point in the right direction, but what industry needs now is consistent implementation and an unwavering commitment to infrastructure for growth.
The lessons from the past few years are straightforward. Just as with the COVID crisis or Russia’s full-scale invasion of Ukraine, the UK cannot control external shocks or dictate events around the globe. But it can control how resilient, investable, and efficient its own infrastructure market is.
At a time of global uncertainty, the need for a strong economic basis is more important than ever – and CECA looks forward to working with our members, the Government, and all other stakeholders to ensure the UK’s civil engineering contractors are in the best possible place they can be – to drive economic growth, create jobs, and serve businesses and communities in the months and years to come.