16th June 2026

Glenigan | A Hubexo Product, one of the construction industry’s leading insight and intelligence experts, has released its widely anticipated UK Construction Industry Forecast 2026-2028. Predominantly focused on underlying starts (<£100m in value), unless otherwise stated, it contains a comprehensive overview of the current state of the construction industry.

Glenigan’s Summer 2026 Forecast is published against the backdrop of an extraordinary series of domestic and international events, which have shaken global markets to their foundations and rocked the entire UK business and industry landscape.

Construction was already one of the hardest hit sectors. Yet when Glenigan released its last Forecast in the back end of 2025, it had been looking forward to a relatively stable 12 months with modest recovery. Still, no one could have predicted what would happen over the past six months and, with little sign of these phenomena resolving any time soon, figures have had to be revised.

However, the good news is the impact is expected to be short-lived. Glenigan’s latest numbers predict that, whilst the year will end in negative growth of -1%, this will be offset by an 11% activity increase in 2027, and 4% in 2028 (+13% on 2025). This is dependent upon a gradual re-strengthening of the UK economy which, although fragile, appears to be withstanding considerable external pressures.

Considering the Forecast’s findings, Glenigan’s Economics Director, Allan Wilen, said, “It’s been a turbulent few months for the UK construction sector, with investors and developers reassessing and rescheduling planned projects. However, the economic outlook is expected to improve once the current fog of war dissipates, supporting a strengthening in construction activity from 2027 with an uplift across almost all private and public sector verticals.

He continued, “As our Forecast shows, there are some particularly exciting growth areas as Government funding is released and investor appetite starts to return to the market. Contractors will need to be quick off the mark as more favourable conditions are finally felt. There will be no time for hanging around and the quicker the sector’s reaction, the sooner momentum will return and stick.”

Looking at the highlights from the Forecast, despite the here and now remaining tough, key drivers for growth over the next two years include increased consumer spending and higher public sector investment, as well as an expansion in infrastructure and utilities work.

Gearing-up for renewed growth

In the private sector, financial viability and economic uncertainty are still key constraints to project progress near term. However, there are likely to be some big winners in the non-residential verticals over the next few years. Industrial and commercial office projects are set to significantly boost private sector activity, with strengthening project starts as UK economic growth gathers pace, supported by increased business investment. Although, the former will see a 9% downturn this year, improving market conditions and firm demand for logistics space, backed by the Government’s National Planning Policy and Infrastructure Strategy, will help deliver increases of 16% in 2027 and 5% in 2028.

Offices have been one of the outliers amid a particularly gloomy first half of the year; this upward trajectory is set to rise further, resulting in an impressive 21% lift by the end of 2026. It’s expected to then slow in 2027 after two years of rapid growth, slipping back 11% before returning to growth in 2028 (+4%). The key reason for this impressive resilience is a healthy appetite for high-quality, sustainable office space, as occupiers prioritise energy-efficient and flexible working spaces. Simultaneously, the rapid proliferation of AI is prompting greater demand for data centres (which are covered by this vertical).

Prognosis positive for Health and Education

Whilst there have been recent delays, non-residential performance is forecast to increase with schemes such as the New Hospital Programme and the School Building Programme set to drive activity over the Forecast period.

Education is destined for a season in the sun, climbing 8% by the end of the year and by 20% in 2027, followed by a further 5% rise in 2028. School construction continues to dominate activity, as a clearer funding pipeline unlocks investment to rebuild and renovate a large swathe of tired and crumbling stock.

Health’s diagnosis is also positive, with recovery predicted by the year end (+9%) and by an equal level in 2027 (+9%) before increasing exponentially in 2028 (+14%). Propelled by increased capital funding and the release of deferred schemes, NHS trusts will be able to address the extensive repair backlog across existing estates. Furthermore, additional funding targeted at modernisation and capacity expansions (including diagnostic and community care hubs) will provide a shot in the arm to construction output.

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Civils is on the Up(grade)

Civils is likely to remain flat by the end of the year (0%), no surprise given the significant activity decline in the vertical over the past 18 months. A 15% surge is predicted in 2027 before flattening out in 2028 (0%).

Water sector investment programmes are gaining momentum, with Ofwatgreen-lighting £104bn investment in upgrades and repairs between 2025-2030. Strong growth across electricity networks and renewables are being driven by continued investment to deliver the Government’s Net Zero energy push; offshore wind and nuclear projects, including Hinkley Point C and Sizewell C will underpin activity.

Transport infrastructure also gets a look in, strengthening from next year, supported by Spending Review funding for road maintenance and rail upgrades, including HS2 and the TransPennine Route.

Residential set to rise-high from 2027

Housebuilding experienced a disappointing start to 2026 after a lacklustre second half of 2025, so it’s little surprise that both the private (-5%) and social (-3%) verticals will finish the year in the red. Whilst the immediate outlook is unavoidably subdued, both are set for a solid revival in the remainder of the Forecast period.

Private housebuilding is expected to rebound 13% in 2027 and by 5% in 2028, this is driven by an expected decrease in borrowing costs and improved consumer confidence. Simultaneously, supply-side conditions should ease as regulatory bottlenecks loosen, and planning reforms increase site availability.

On the social front, a more conservative 8% lift is forecast for 2027 and 4% in 2028. Increased Government funding as well as changes to the Social Housing Rent Cap are set to support investment, enabling social landlords to bring forward more projects over the Forecast period. Additionally, an acceleration in approvals by the Building Safety Regulator (BSR) is likely to support the delivery of more high-rise apartment schemes.

A swinging pendulum for Retail, Hotel & Leisure

Consumer appetite has been mercurial over the past few years, frenetically fluctuating in tandem with a nervous economy. Nowhere has that been more evident than in Retail and Hotel & Leisure.

Although Retail is forecast to nudge 1% higher by the end of 2026, sector growth will remain subdued until 2027, where a 10% increase is expected, which will give way to a 4% decline in 2028. In the immediate future, higher wages and taxes have hamstrung this vertical. However, assuming an improvement in economic conditions, Glenigan predicts a rise in shop development as people start to reach for their wallets once more, with supermarkets continuing to account for the largest share of activity.

The Forecast period is more volatile for Hotel & Leisure, which is scheduled to finish 2026 at 12% down, only to rise 11% in 2027 before dipping 1% in 2028. Similar to Retail, cost pressures and geopolitical instability are throttling hospitality margins and deferring new investment. Squeezed between global and domestic challenges, the war in Iran has placed considerable strain on global tourism; domestically, travel has been hit by rising fuel prices and cost-of-living pressures.

Conditions will likely improve in line with a recovering economy, encouraging operators to restart delayed projects. Furthermore, the introduction of permanently lower business rates for Retail, Hospitality and Leisure will no doubt unlock further growth, reducing operational costs and improving the viability of new developments, expansions and refurbishments.