– Against a backdrop of economic and geopolitical uncertainty, UK GDP grew by 1% in 2025. A sharp and prolonged reduction in growth was seen following the introduction of global trade tariffs in April.
– Despite surprise 0.5% month-on-month GDP growth in February, the Bank of England downgraded 2026 growth expectations to 0.9%, from 1.2%, citing heightened uncertainty following the outbreak of conflict in the Middle East and the consequent pressures on global oil & gas markets.
– Job vacancies in the construction sector fell 32% over the course of 2025 which reflects the subdued levels of construction starts rather than any improvement in skills availability.
– Construction employment in London and the Home Counties is expected to continue declining in 2026, with jobs growth of -0.2%. While still negative, this represents an improvement on 2025, with growth anticipated to return in 2027.
– According to the BEIS, material prices remained relatively stable throughout the second half of 2025. However, depending on the length of the conflict in the Middle East, inflationary pressures brought on by energy market disruption could push prices on an upward trajectory. As a result, we forecast tender prices to rise by 3.5% this year.
– Construction output data suggests levels are largely stable with infrastructure output continuing to grow year-on-year, albeit, marginally at 1.7%.