NEW research has revealed that the key drivers of ‘cautious growth’ in UK construction remain similar to three months ago but the economic risks and uncertainties have risen ‘considerably’.
The Construction Products Association’s (CPA) Summer Forecasts states that total construction output is forecast to rise by 1.9% in 2025 and 3.7% in 2026.
The growth in construction activity is tipped to be driven by the three largest sectors: private housing new build, private housing repair, maintenance and improvement (rm&i) and infrastructure. However, the CPA said these sectors remain vulnerable to delays in starting new projects in the near-term, homeowner and consumer confidence to spend, and risks around the government increasingly looking as though it will need to raise taxes once again, potentially cut back on its capital expenditure plans, or both.
Private housing output is forecast to rise by 4% in 2025 and 7% in 2026. In private housing rm&i, activity continues to be supported by government-subsidised energy-efficiency programmes, predominantly for heat pumps and solar photovoltaics, as well as a stream of fire safety remediation work. Infrastructure activity continues to remain strong on major projects such as Hinkley Point C and HS2, with water & sewerage as well as energy generation and distribution also set to become key drivers of growth next year.
Rebecca Larkin, CPA head of construction research, said, “The key fundamentals for the construction industry remain largely unchanged. Although everything continues to point towards the gradual growth in construction activity gathering pace over the rest of this year and in 2026, the only thing that has changed is the uncertainty.
“The forecasts envisage demand and activity gradually picking up in the two largest construction sectors but with all the different uncertainties around the economy, the key question for housing new build and rm&i is still when will mortgage rates fall to allow for more homebuyers, when will existing homeowners feel confident enough to spend on larger home improvements, and when will delays at the BSR ease to allow house builders and developers to start more high-rise projects.”
