The Construction Products Association (CPA) has issued updated autumn forecasts, indicating a cautiously optimistic outlook for UK construction.
- Following a challenging period, the industry anticipates a 2.5% and 3.8% increase in output for 2025 and 2026, respectively.
- Private housing and Repair, Maintenance, and Improvement (RMI) sectors are showing signs of recovery amidst persistent challenges.
- Infrastructure projects, despite current setbacks, are projected to grow steadily over the coming years.
- Government policies and economic conditions, notably the Autumn Budget, remain pivotal to sustaining industry growth.
The CPA’s recently published autumn forecasts highlight a shift towards ‘cautious optimism’ in the UK construction sector. Total UK construction output is projected to increase by 2.5% in 2025 and 3.8% in 2026, rebounding from a 2.9% decline this year. Notably, this marks a more positive outlook compared to just three months prior, where growth was expected at 2.0% and 3.6% for 2025 and 2026, respectively.
The private housing sector, a significant component of the industry, has faced substantial difficulties over the past 18 months. Interest and mortgage rate decreases are gradually spurring demand recovery, presenting a more favourable scenario for house-builders. However, persistent supply challenges remain, including planning resource shortages at local authorities, environmental regulations, and delays linked to the Building Safety Act.
Despite these hurdles, a recovery is on the horizon, with private housing output forecast to climb by 8.0% in 2025 and 7.0% in 2026, following a 9.0% contraction this year. In the RMI sector, growth is closely tied to consumer confidence and real wage increases. The anticipated recovery in the housing market, coupled with durable real wages, is expected to fuel RMI activity by Q2 2025. Recent trends show a shift in consumer spending towards energy-efficient retrofitting and solar projects, which continue to drive activity.
Outside the housing market, the infrastructure sector remains critical, notably projects like Hinkley Point C and HS2, despite ongoing challenges like cost overruns. Infrastructure output is forecast to rise by 1.6% in 2025 and 3.8% in 2026. Investments in regulated sectors such as rail, energy, and water are predicted to provide consistent activity, although immediate impacts may lag due to current project timelines.
The CPA’s economic director, Noble Francis, underscores the dual risks and opportunities facing the industry. While a stable UK government and supportive macroeconomic factors are beneficial, uncertainties around fiscal policies and potential government budget adjustments continue to pose threats. Significant increases in infrastructure investment could strengthen recovery, though potential capital expenditure cuts could hinder progress.
The future of UK’s construction industry is teetering between cautious optimism and significant challenges, requiring careful navigation of economic and policy uncertainties.
