UK Construction Activity Remains Subdued with Slow Signs of Recovery

Construction activity across the UK remained broadly flat in the final quarter of 2025, according to the latest RICS UK Construction Monitor. However, forward-looking indicators point to a modest recovery in 2026.

Overall workloads showed little change in Q4, with the headline net balance improving slightly to -6%. This continues a prolonged period of subdued conditions across much of the sector.

Infrastructure

Infrastructure stood out as the clear bright spot. Workloads in the sector strengthened further, with a net balance of +12%, underpinned by particularly strong performance in energy-related projects. Infrastructure is also expected to lead growth over the next 12 months, with workload expectations rising to a net balance of +32%, the strongest of any sector.

Private Housing

Elsewhere, conditions remained challenging. Private housing activity weakened again in Q4, whilst private commercial and industrial workloads, despite marginal improvement, stayed firmly in negative territory. Public housing showed some signs of stabilisation but continued to contract overall.

Financial constraints and planning pressures remain the dominant headwinds facing the industry. Around six in ten respondents cited financial constraints as a key barrier to activity – whilst planning delays were reported by a similar proportion. Credit conditions remain tight, although sentiment has improved modestly, particularly in the 12-month outlook.

Signs of Recovery

Looking ahead, expectations for workloads and employment have strengthened. The 12-month workload expectations balance rose to +17%, while employment expectations increased to +14%, suggesting a cautious improvement in sentiment. However, profit margins remain under pressure, with respondents continuing to report that construction cost inflation is likely to outpace tender price growth.

RICS Chief Economist, Simon Rubinsohn, said: “The latest results provide little sign of a broad-based uplift in activity in the construction industry with respondents continuing to draw attention to challenges around planning and the building safety regime in particular, as well as viability related issues.

“The forward-looking metrics are a little more positive with workloads seen as likely to accelerate, most notably in infrastructure driven by a pronounced increase in activity in the energy generation and distribution area as well as water.

“However, any pick-up in housing development is likely to be relatively modest and way short of what would be required to get anywhere near approaching the 1.5 million home target. While the passage of the Planning and Infrastructure Bill is seen as helpful for housebuilders, on its own it is not going to be sufficient to meaningfully move the dial.”

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