Glenigan, one of the construction sector’s leading insight and intelligence experts, in its widely anticipated UK Construction Industry Forecast, says there is renewed momentum in the industry going into the New Year.
The key take-away from the November Forecast, which focuses on the three years 2024-2026, is that construction project-starts will continue to strengthen as the UK economic growth gathers pace.
Renewed construction growth is forecast for 2025 (+8%) and 2026 (+10%) as the prospect of recovering market certainty lifts consumer and business confidence, boosting the industry.
Civil engineering project-starts have rebounded strongly in 2024 (+26%) after a 6% decline in 2023. Underlying work (projects valued <£100m) has influenced this figure, despite the cancellation of several major infrastructure projects.
Recovery is forecast for 2025 and 2026. Since the Government’s election starts are stabilising, with private work levels gradually rising. Although Glenigan predicts only a modest 1% performance dip for 2024 by the year’s end, comparatively it’s a massive improvement against the 7% drop in 2023.
Firm development pipelines are also pulling through, with main contract awards standing 7% up on 2023 figures, supporting a renewed rise in industrial and office starts as investor confidence improves.
Positively, civil engineering is expected to grow steadily over the forecast period, driven by utilities projects. Utility starts are likely to strengthen in 2025 as water companies begin implementing their investment programmes. The expansion of fibre-optic broadband across the UK will also contribute to sector growth.
Water companies have proposed doubling capital investment to £96 billion for AMP8, the next five-year control period, which includes projects such as new reservoirs and river quality improvements. While the regulator may scale back some plans, a substantial increase in water industry investment is expected.
Energy investment is also set to grow, with a focus on renewable energy and grid enhancements to support Net Zero goals. This includes both major projects, like offshore wind farms, and smaller developments, such as onshore wind and solar PV projects.
Overall, Glenigan is forecasting a 5% rise in sector activity in 2025, and a further 7% in 2026. Commenting on the Forecast, Glenigan’s Economic Director Allan Wilen says, “The construction sector is on track for growth from 2025. The recent Budget’s adjustments to fiscal rules, allowing for higher levels of capital investment, will also unlock significant public sector and infrastructure projects, providing a much-needed boost to government-funded initiatives over the next two years.”
