18th June 2025

Glenigan | powered by Hubexo, one of the construction industry’s leading insight and intelligence experts, has released its widely anticipated UK Construction Industry Forecast 2025-2027. Predominantly focused on underlying starts (<£100m in value), unless otherwise stated, it contains a comprehensive overview of the current state of the construction industry.

The key takeaway from the Summer Forecast, which focuses on the three years 2025-2027, is that the sector will experience a much-needed resurgence in activity, as the UK economy continues to improve and public funding for critical infrastructure is set to increase following last week’s Spending Review.

With growth predicted for 2025 (+3%), 2026 (+10%) and 2027 (+11%), these positive figures, spurred on by greater consumer and business confidence, will no doubt be welcomed industry-wide, especially following a disappointingly stagnant second half of 2024.

A reversal of fortunes

Despite the promise of renewed growth, 2025 got off to a rocky start, likely experiencing a hangover from a very disappointing 2024, which was rocked by socio-political turmoil at home and abroad.

However, as the Government found its feet over the Spring, and more certainty started to return to the markets, the prospects of renewed growth appeared increasingly likely. The main driver for this upturn has been a strengthening in domestic demand, particularly consumer spending amid heightened unease in global markets.

This is reflected in the recent uptick in underlying construction starts over the previous quarter, which is anticipated to remain stable following the various building and upgrading commitments made by the Chancellor of the Exchequer last week.

Private sector confidence finally returns

The private sector is also playing a key role in this momentum boost, with residential starts rising significantly over the last four months. This is set to increase as rising household incomes and lower interest rates lift housing market activity, reaching an +18% performance high by 2027.

Whilst recovery is set to be slower in other parts of the private sector, particularly industrial and commercial construction, Glenigan speculates these verticals will gather pace as business investment starts to unlock, in line with thawing consumer confidence.

Particularly, a spurt of new office construction, rises in retail and hotel and leisure and industrial benefitting from a greater appetite for online retailing, catalysing the construction of more warehouse and logistics facilities.

Education, health, communities and amenity and civils are all projected to benefit from increased Treasury support.

Commenting on the Forecast, Glenigan’s Economic Director, Allan Wilen, said, “It’s been a frustrating few years for the construction sector, just as there seems to be light at the end of the tunnel a new set of headwinds seems to buffer it, leading to prolonged stagnation. Yet recent events indicate we’re finally turning a corner. Consumer spending power and confidence are improving. This has supported an upturn in housing market activity and is expected to help drive private housebuilding over the next three years.

“The promise of some refreshingly strategic spending from the Government will certainly send a positive signal to contractors and subcontractors nationwide with spending earmarked for a number of big and small projects presenting plenty of opportunities.”

He continued, “We should also not underestimate the mercurial nature of geopolitical events. Whilst the US tariffs have caused turmoil across the world, the UK’s relatively lighter treatment may help to renew private investors enthusiasm to put their money in our built environment. Of course, trade negotiations are ongoing and volatile, so construction businesses need to approach predicted growth with an element of caution. However, as it currently stands, the signs are positive and the industry can look forward to an extended period of increased activity.”