After months of build-up and a fair share of speculation, the Autumn Budget has finally been announced. I’m Tolga, and I head up Consultancy at Barbour ABI. I’m going to touch on some of the early Christmas presents — and a few lumps of coal — that the little red budget box held for construction.
This comes at a critical time for the industry; a sector mired by ballooning costs, increased regulatory pressures, and extended project timelines.
It should be no surprise that our 2025 growth forecasts are sluggish at around +2%. So all eyes have rightly been on the government to see what they can do to stimulate output in a sector that is critical to the wider health of the economy.
Stability as the Central Theme
Stability was the key word going into the budget, with much of the industry calling for confidence that the playing field will be the same next year as it is today. Has this budget achieved that?
Broadly speaking, yes.
The government has committed to keeping public capital investment at an historic high and reiterated the importance of Transport, Energy, and Housing initiatives.
The budget has also devolved £13bn to the seven city mayors, enhancing their power and resources to invest in local communities. While it is not yet clear how much of this will flow directly into construction-related projects, schemes such as Wolverhampton’s Smithgate and Canalside South Regeneration illustrate how regeneration is being prioritised alongside transport enhancements.
Where Stability Falls Short
The flip side to stability is stasis, and it could be argued that this Budget is not transformative enough. Many of the headwinds felt on Tuesday are still present today.
Rising costs have been an ongoing challenge in construction, hamstringing the viability of many projects. If the government wants to build the economy “brick-by-brick,” it needs to help bring down the cost of putting those bricks up.
The increase to Minimum and National Living Wages will undoubtedly add to the cost burden in construction and will likely affect SMEs disproportionately, where margins are already tight.
Cost Pressures and a Notable Reprieve
Not all costs have gone up. It was particularly encouraging to see the Government step back from its proposed Landfill Tax rises, which would have classified building rubble in the same category as household waste and could have added up to £25,000 to the cost of each new home.
This reassurance should give housebuilders greater confidence to progress with developments, although viability will remain a barrier — particularly in the absence of a much-desired replacement Help-to-Buy scheme to boost affordability.
Outlook for Construction
All in, the budget signals a strong pipeline of work ahead, particularly in civils and the energy and decarbonisation sectors. And if stability was the goal, then Rachel Reeves should consider her budget a success.
However, it represents evolution rather than revolution, and this alone will not be enough to stimulate the level of growth many would like to see from the construction sector.
The Bulletin: Construction Forecast 2026
The budget is just one of many interconnected factors feeding into our market forecasts at Barbour ABI. On 13 January 2026, I will be joined by a panel of industry-leading voices to discuss the market outlook as we launch our latest Forecast Bulletin.
