The UK construction industry has demonstrated resilience amid recent economic challenges, with several indicators suggesting a significant upswing in 2025.
Historical Performance and Recent Trends
In the third quarter of 2024, the construction sector experienced a 0.8% increase in output, primarily driven by a 2% rise in new work. However, repair and maintenance activities declined by 0.6% during the same period. September’s figures showed minimal growth, with a 0.1% uptick in overall construction activity and a slight decrease in new work. Notably, new orders fell by 22% in the third quarter, indicating potential challenges ahead.
Forecasted Growth in 2025
Despite these mixed signals, industry forecasts remain optimistic for 2025. Glenigan’s Construction Industry Forecast anticipates renewed growth, with private sector investors and consumers adjusting to the higher interest rate environment. A further strengthening in project starts is expected as UK economic growth gathers momentum, supported by a pick-up in household spending and business investment.
Similarly, Currie & Brown’s UK Construction Market Outlook projects modest growth in 2025, with a robust recovery from 2026 onward. This projection underscores the need for long-term stability and strategic planning within the construction industry.
Government Initiatives and Infrastructure Investment
The government’s focus on infrastructure investment is expected to be a key driver for economic growth. Aligning private funding with public investment is crucial to expedite project initiation. Priority areas include healthcare, transport, and education, with both new construction and retrofitting projects anticipated. While labour costs may continue to rise, a robust pipeline of new work could mitigate these concerns, positioning firms favourably as they approach 2025.
What This Means for Contractors
For contractors, these developments present both challenges and opportunities. The anticipated growth in new work suggests increased demand, particularly in sectors like infrastructure, healthcare, and education. However, with new orders declining and cost pressures rising, contractors must focus on competitive pricing, efficient project management, and maintaining strong relationships with suppliers and clients.
Leveraging digital tools and platforms like The Build Chain can also help contractors stay ahead by streamlining procurement, improving cost control, and ensuring access to the best pricing in a competitive market. The ability to adapt and innovate during this period will be crucial for long-term success.
In summary, while the UK construction sector faces current challenges, the outlook for 2025 is promising. Strategic planning, effective collaboration between public and private sectors, and the successful implementation of planned infrastructure projects will be key to capitalizing on the anticipated growth.
