UK market view: Q4 2025

Construction output edged up by 0.1% in Q3, with repair and maintenance offsetting a small decline in all new work. While headline growth was modest, the broader picture remains mixed as weaker GDP, softening labour market indicators, and fragile confidence continue to shape delivery conditions.

The Q4 edition of our Market View explores these dynamics, highlighting the impact of cooling wage growth, subdued economic performance, and a large pipeline of government‑backed projects that could accelerate activity in 2026. Despite the Budget offering little new for construction, reaffirmed commitments to major programmes continue to underpin long‑term demand.

New orders rose by 9.8% in Q3, their strongest performance in over a year, driven by private industrial and a rebound in commercial work. This uplift should support output growth next year. However, constraints persist. Wage growth has slowed to 3.5%, vacancies are falling, and labour shortages risk re‑emerging as future schemes come forward.

Capacity, capability and risk appetite remain key challenges. With major programmes such as the Lower Thames Crossing, East West Rail and Heathrow expansion set to progress, clients may need to engage the market earlier and more strategically to secure the right partners. Contractor caution, longer pre‑construction periods and selective bidding continue to influence pricing and delivery timelines.

Material prices are beginning to rise again after declines earlier in the year, and global commodity pressures are adding costs in specialist sectors. Combined with a cooling but still tight labour market, these factors are likely to shape tender price trends through 2026.

As the sector prepares for what could be a make‑or‑break year, early engagement, collaboration and clear project scopes will be essential. Our Q4 2025 Market View provides a detailed look at the road ahead, from inflation forecasts and policy updates to sector‑specific insights and delivery considerations for clients navigating an uncertain market.