The UK construction industry is poised for significant growth over the next two years, with a forecasted eight per cent increase in construction output in 2025, followed by a 10 per cent boost in 2026, according to market expert Glenigan’s UK Construction Industry Forecast 2025-2026. This growth is a sharp contrast to the expected 1 per cent contraction in 2024.

Key drivers of this recovery include a gradual recovery in private housing starts, which are predicted to grow by 13 per cent in 2025 and 15 per cent in 2026 as housing affordability improves. In addition to this, public investment is expected to rise in the latter half of the forecast period, bolstering project starts.

The economic recovery is also expected to be supported by improved consumer confidence, increased household spending, and fiscal changes introduced in the recent Budget. Glenigan’s Economic Director Allan Wilen highlighted how these factors are set to drive activity in sectors like private housing, retail, and hotel & leisure. The adjustments to fiscal rules in the Budget, which allow for higher levels of capital investment, are anticipated to unlock significant public sector and infrastructure projects, providing a much-needed boost to government-funded initiatives.

Glenigan also noted that the general political climate is expected to stabilize following the upcoming General Election, which should reduce political uncertainty and create a more favorable environment for investment. This will help accelerate the growth of project starts, especially in the private sector, where confidence has been improving.

Looking ahead, the construction sector is expected to see the largest growth in offices, with an 18 per cent increase forecasted in 2025, followed by a 15 per cent rise in private housing in 2026. In contrast, social housing, which saw a significant decline in 2023 and 2024, is projected to experience sustained growth of 11 per cent in 2025 and 2026.

Meanwhile, civil engineering is predicted to see a modest 5 per cent increase in 2025, following a significant 26 per cent growth in 2024. Retail, on the other hand, is expected to grow by just 1 per cent in 2025, a sharp drop from the 14 per cent growth experienced this year.

Overall, the forecast shows a recovering and expanding construction sector, as economic conditions improve, political uncertainty lessens, and key sectors like private housing and infrastructure projects see significant growth.