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The Omicron variant of covid-19 has been blamed for a huge slump in the value of small project starts, with last month seeing the lowest values in over a decade.

Construction data specialist Glenigan鈥檚 latest construction index said the overall value of projects starting in December valued at 拢100m or less was the lowest since December 2010.

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The number was even lower than April and May 2020, the first two months of the covid pandemic when much of the economy was under strict lockdown measures.

Uncertainty over the impact of Omicron and disruption to delivery times caused by material and labour shortages were the likely causes of the slump, Glenigan said.

The firm鈥檚 economic director Allan Wilen added: 鈥淚 think clearly [the fall is] very much linked to what鈥檚 happening in the wider economy but also the fourth wave of covid infections and the disruption that causes.鈥�

He said some firms had delayed new projects due to them 鈥渟till working on existing projects because of all the disruption they鈥檝e seen from the pandemic itself, but also in terms of material shortages.鈥�

And he warned that delivery and labour issues caused by covid are now likely to persist into the first quarter of this year, delaying construction鈥檚 recovery.

He said: 鈥淭he current round of infections and the need for people to [self-isolate] and the loss of labour temporarily from the workforce, I think that will disrupt the pace of recovery over the next couple of months. I think it鈥檚 going to be a muted start to 2022, unfortunately.鈥�

He added that approaching headwinds in the form of tax rises, inflation, higher energy costs and potentially rising mortgage and interest rates in the spring could also have implications for the industry.

Its latest report also found that the office sector - which had shown signs of a rebound earlier in the autumn following a prolonged slump caused by working from home - had been the worst hit out of all sectors.

The value of office starts in the three months to December dropped by 41% compared to the previous three months and was 30% down on the same month last year.

Wilen said the figures were likely the result of 鈥渘ervousness鈥� in the sector towards the end of last year due to rapidly rising covid infections and another round of government advice for staff to work from where possible.

Across all sectors, the value of small projects starting on site in the fourth quarter of last year fell by 7% compared to the previous quarter and were down by 18% on the same period in 2020.

Last week, the latest IHS Markit/CIPS report said the rapid spread of the Omicron variant of coronavirus put the brakes on the industry鈥檚 ongoing recovery in December with warnings growing that sites may have to temporarily close if too many workers are being forced to self-isolate under new covid rules.

It said the growing number of cases and people being forced to self-isolate blunted growth in December with the index posting a score 54.3 鈥� down from 55.5 in November 鈥� which was the weakest growth for three months.

Omicron first appeared in late November and Tim Moore, director at IHS Markit, which compiles the survey said: 鈥淯K construction companies ended last year on a slightly weaker footing as renewed pandemic restrictions held back the recovery, especially in commercial work and civil engineering. Some firms commented on disruption from rising covid-19 cases.鈥�

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