UK's housing and office shortages threaten long-term economic growth, says RSM chief economist

Tom Pugh, chief economist of RSM UK, warned that the country's chronic shortfall in housing and office construction is undermining sustainable economic growth. He argued that the planning system, rather than demand or financing, is the primary bottleneck, and noted a 13% drop in new-home starts in the most recent quarter, with only about 4,550 homes projected for 2027-28. While the Ministry of Housing, Communities and Local Government cites a 20% rise in starts and a £39 bn Social and Affordable Homes Programme, Pugh says the reforms have not matched the government's pre-election promises.

The shortage of new office space, from inner-city professional blocks to life-science labs, also threatens productivity gains. Analysts see the construction slowdown as a key factor in the UK's two-decade productivity lag. Addressing regulatory hurdles could unlock the needed supply and support broader economic expansion.