UK market view: Q2 2025

Much of the economic news over the past quarter has focused on US President Donald Trump’s tariffs. Fortunately, tariffs on UK exports were set at the lowest rate of 10% and, so far, the macroeconomic effects on the UK look to be limited. On average, GDP growth forecasts for this year are the same as they were in March, although economists have nudged down expectations for 2026. 

Our report for the first time separates real estate from infrastructure to reflect the differing market impact on these sectors. It will now provide forecasts for UK real estate, UK infrastructure and an all-in number for London. Demand and sentiment, always key considerations when preparing our tender price forecasts, have diverged noticeably over recent years between infrastructure and real estate. In particular, housing and private commercial, by far the two largest real estate sectors, have had a torrid time.

By contrast, infrastructure output is almost 20% larger than pre-Covid and the Spending Review providing more funding for transport and energy as well as over £14bn for Sizewell will only strengthen it further. New orders for infrastructure in Q1 were also almost 130% higher than in Q4 2024 and we expect tender price inflation to be noticeably higher for the next two years. Beyond that point, a recovery in the housing market, potentially supported by the £39bn Affordable Homes Programme, should lead to a convergence in tender price inflation across sectors. 

Read our latest UK market view report to find out more