THE Construction Products Association’s (CPA) Autumn Forecasts reveal that growth expectations for UK construction output have been revised ‘substantially down’ amid growing risks and uncertainty surrounding potential tax rises in the upcoming budget.
Total construction output is now only forecast to grow by 1.1% in 2025 and 2.8% in 2026, down from the 1.9% in 2025 and 3.7% in 2026 in the previous forecast.
The CPA said firms from across the construction supply chain are reporting activity has slowed since spring, particularly in private housing, infrastructure roads, and commercial new build offices.
The association has taken account of the pre-budget uncertainty in its latest forecasts but, like all economic forecasters, will not be able to take account of the tax rises and spending cuts until they are confirmed on 26 November.
In private housing, output is forecast to rise by 2% in 2025 and 4% in 2026, a revision down from the previous forecast of 4% in 2025 and 7% in 2026.
In private housing repair, maintenance and improvement (rm&i), despite sustained real wage growth, the CPA said many households have continued to save rather than spend. A sustained recovery will only occur when homeowners feel confident enough to commit to large, discretionary spending such as home extensions and renovations. Some energy-efficiency retrofits, such as heat pumps and solar photovoltaics, subsidised by government, and fire safety remediation work, continue to be ‘relatively strong small niches’ within the sector but overall, private housing rm&i output is expected to remain flat in 2025 and only rise by 2% in 2026.
In infrastructure, output is expected to rise by 1.9% in 2025 and 4.4% in 2026. However, there is a large variation in fortunes across the sector. Water & sewerage, as well as energy generation and distribution, are tipped to become key drivers of growth next year as activity ramps up under record investment plans. In contrast, road spending is expected to decline over the next few years.
Rebecca Larkin, CPA head of construction research, said, “The pickup in construction activity that had been expected at the start of the year has not materialised as uncertainty continues to hold back house purchases, home improvements spending and private sector investment decisions. The risks and uncertainties around the impact of impending tax rises in the Autumn Budget in November have only intensified and this is likely to leave households and businesses holding off spending and investment for longer, and limit demand in the largest construction sectors.
“The effects of pre-budget uncertainty are being felt now but the impact of the budget tax rises will be felt most strongly as we head into 2026. Currently, the forecast is for 2.8% growth in construction output next year, primarily driven by public sector construction, infrastructure and house building. However, the extent of the government’s tax rises and spending cuts, and who bears the brunt of them, will heavily determine whether 2026 is a year of growth or contraction for the industry.”
