The construction industry had a positive performance in 2024 following a change in the UK government, inflation stabilizing, and an unexpected fall in Consumer Price Inflation (CPI). However, that picture quickly changed at the beginning of 2025, with US tariffs making waves, British Steel’s owners reporting unsustainably significant financial losses, and inflation remaining resolutely stubborn. Sentiment in the construction industry suggested confidence was low as uncertainty rose. Stagflation rumored after the Spring Statement did little to allay concerns over weak growth and declining new work orders.
While uncertainty continues to prevail, driven by cautious investment and projects taking longer to come online, there are plenty of infrastructure projects in the pipeline, including HS2, several offshore wind farm developments, as well as Hinkley Point C, Sizewell C and the Lower Thames Crossing.
Construction activity and demand are more likely to be limited now by inflation and the cost of borrowing, resulting in potentially challenging market conditions. Materials cost inflation remains stable, while labour shortages and the increase in employers’ National Insurance contributions (NIC) have added to construction cost pressures.
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Damas
While uncertainty continues to prevail, driven by cautious investment and projects taking longer to come online, there are plenty of infrastructure projects in the pipeline, including HS2, several offshore wind farm developments, as well as Hinkley Point C, Sizewell C and the Lower Thames Crossing.
Construction activity and demand are more likely to be limited now by inflation and the cost of borrowing, resulting in potentially challenging market conditions. Materials cost inflation remains stable, while labour shortages and the increase in employers’ National Insurance contributions (NIC) have added to construction cost pressures.
Download
*
Damas