Glenigan Warns of Long-Term Risks for UK Construction Sector Due to War in Middle East

As conflict in the Middle East continues to escalate and supply chains are disrupted, it presents yet another challenge for the UK construction sector, as it desperately tries to recover lost ground. 

These are turbulent times, and organisations across the industry need to be prepared for the worst.   According to Glenigan’s Economics Director, Allan Wilen, “Whilst the international situation remains incredibly uncertain, the UK business & industry landscape is already starting to feel the pinch of the extreme volatility we’ve experienced over the past fortnight, especially construction.

“From housebuilding to major infrastructure, the shockwaves will be felt as the prospect of lower borrowing costs fade and as operational costs spiral from higher energy costs and reduced access to key structural materials as the strait of Hormuz remains at the centre of the conflict zone.

UK construction activity remains significantly depressed. Our latest Index, tracking projects under £100 million starting on site, shows a 15% year-on-year decline in value, and is 24% lower than 2024 figures. At the same time, a limited pipeline of projects over £100 million has contributed to a 26% year-on-year contraction in the overall market.

“For the industry this means that those currently weak areas, especially private residential, will continue to slide and other areas which have seen increases, such as commercial offices, will see that growth put in jeopardy. This makes existing pipelines extremely fragile with no guarantee that signed and sealed projects will be delivered according to agreed dates.

“The supply chain across the industry will be watching the situation nervously, with the best outcome being a swift resolution of the conflict and the unblocking of trade routes. Every day of logistical disruption is a body blow for construction and will set back recovery even further into the future.

“In the meantime, firms need to assess the vulnerability of their order books to delay and higher construction costs and seek to ensure that they identify and secure new projects that can bridge potential gaps in their workload.”

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