Commercial property development has slumped to a 12-year low in the run-up to Rachel Reeves’s tax-raising Budget, data show.

Hardly any developers began office, retail or warehousing projects in the three months from July to September, after Labour took power.

According to analytics business CoStar Group, only 8m sq ft of commercial space started on site across the UK in Q3 2024, equalling around 122 football pitches. This was the lowest level since Q3 2012, when new starts totalled 6.6m sq ft.

Between July and September this year, persistently high costs and rising office vacancies also impacted decisions to commence works.

Patrick Scanlon, senior director of market analytics at CoStar, said that developers were facing “cliff-edge uncertainty” at the time amid rampant speculation that the Chancellor would launch a record tax raid.

Interest rates would also have ramped up the cost of financing projects, according to Mr Scanlon, since most developments are funded by debt.

The construction industry is bracing for the impact of employer national insurance contribution increases announced by Ms Reeves, from 13.8pc to 15pc. The threshold at which employers become liable to pay the tax has also been cut, from £9,100 to £5,000 per year. Both changes will take effect in April next year.

Labour costs - one of the main causes of build cost inflation - are already on the rise. CoStar cited data from the Department of Business and Trade, which shows average weekly wages in the UK construction sector are 33pc above mid-2020, outpacing wage growth in the wider economy. While the cost of construction materials has started to fall, it remains more than a quarter above 2020 levels.

Researchers at CoStar said new construction starts have declined since the start of 2022. Offices have especially suffered, after the shift to working from home led to weakened demand from tenants.

CoStar said it has been the weakest six-month period for new office developments this century. Just 1.2m sq ft of office projects began nationwide during that time, falling below an average of nearly 5m sq ft since the beginning of the pandemic.

Mr Scanlon noted there is nearly 60m sq ft of empty premium office space across Britain, enough to meet around three years of demand, so the effects of sluggish building work will not be felt immediately.

The amount of office space already under construction has fallen to a decade low, after dropping by 13pc year-on-year to 22m sq ft.

Barely any new retail space is being built, with construction starts falling to a record low of just 300,000 sq ft, falling by more than three-quarters from the previous year. In warehousing, new starts have fallen by 15pc on the previous year.