Economic uncertainty, rising costs, planning challenges, skills shortages and geopolitical tensions have all contributed to a steady stream of cautious forecasts and downbeat headlines. Our own latest UK Construction Forecast Bulletin reflects these pressures, with the near-term outlook proving more challenging than many anticipated at the start of the year.
But while the headlines focus on whether construction is up or down, the more interesting story is often found elsewhere.
Looking beneath the headline figures, the data reveals a range of different trends across sectors, regions and types of construction activity. Those differences help explain why businesses operating in the same industry can experience different conditions.
Differences by sector
While the headline figures for the whole industry are important, trends in different parts of the sector can vary considerably.
Some things are well known – the housing crisis is a daily headline and the significant challenges it faces continue. But, while some challenges are common to parts of the industry, some are not. Many of the issues facing housebuilding are not affecting infrastructure activity. Public-sector projects have the certainty of government funding, such as the funding directed at growing low carbon energy capacity or the AMP8 spending on water and sewerage infrastructure. Likewise, new work can be in decline, while RMI holds up.
This is particularly evident during periods of uncertainty. Some parts of the industry are being affected by affordability pressures, viability concerns and delayed investment decisions. At the same time, other areas continue to be supported by committed spending programmes, long-term investment strategies and established pipelines of work.
For businesses planning ahead, these distinctions matter. And we can’t simply wait for things to get better; we need to seek out what opportunities are there and make the best of them.
Sector trends vary by region
The regional analysis tells a similar story.
There was modest growth in construction output in 2025. But this wasn’t uniform across regions. In fact, this varied considerably by region with some areas declining and others hitting double-digit growth.
Different regions also experience considerably differences in the profile and performance of different sectors. In some areas, infrastructure and energy-related investment played an important role. In others, housing activity remained relatively resilient despite wider pressures on the residential sector. Elsewhere, growth was supported by industrial construction, public-sector programmes or RMI activity.
This means two businesses serving similar customers may have experienced very different market conditions depending on where they were operating. Understanding regional patterns can therefore be just as important as understanding the national outlook.
Long term policy and social factors
Economic indicators will clearly have an important influence on construction activity. However, there are long term trends that can continue to affect opportunities during difficult times.
A series of public sector spending announcements mean increased funding across several sectors, despite the tough conditions. In the private sector- offices, for instance. The sector is heavily influenced by the economic climate – as investors push back planned development. However, Grade A space remains in demand. While large new developments may be postponed, there may be opportunities in high quality refurbishment projects. As economic growth returns both new offices and refurbishment is likely to see growth.
Why detailed analysis matters
Periods of uncertainty are often when market intelligence becomes most valuable.
When growth is strong across the board, opportunities can be relatively easy to find. But when conditions become more complex, businesses need a clearer understanding of what is happening below the surface.
Sometimes it means diversifying away from one sector or region, and focusing on another. Sometimes it means getting ready for when growth will return or changes will take affect – such as the Future Homes Standard.
That means understanding not only whether activity is rising or falling, but also where it is taking place, which sectors are driving demand, how regional trends are evolving and what factors are likely to influence future workloads.
Our latest Construction Forecast Bulletin explores these patterns in detail, providing sector and regional analysis to help organisations better understand the forces shaping UK construction over the coming years.
Construction Forecast Bulletin, by Barbour ABI
The Construction Forecast Bulletin provides a review of construction output across all major sectors from 2021 to 2025 and forecasts for 2026 through to 2030, based on analysis of sector trends, orders, spending commitments and government and industry priorities as they appear at this time.
The Bulletin includes analysis of planning applications, approvals and awards from the Barbour ABI platform, providing insight into how the different construction sectors are likely to perform going forward.
Click below to view this report on our store website where you can see an exhaustive list of the table of contents, market summary, and more.
Contents
