UK Construction Market Report 1Q 2025
Executive summary
It’s been an eventful start to 2025, with a range of political events impacting how our industry operates. In our 1Q 2025 market survey, respondents identified global tensions as the top threat to the construction industry, closely followed by investor confidence and interest rates. In contrast, 1Q 2024 saw interest rates and inflation take the lead.
This shift highlights the ongoing market instability the industry expects in the coming months. Despite the uncertainty, the outlook for tender opportunities remains cautiously optimistic—47% of respondents expect no change, while 32% predict an increase.
Construction is rarely a quiet sector to operate in, but 2025 has brought both encouraging developments and new challenges. The positive funding measures in Rachel Reeves’ Spring Statement contrast with the turbulence caused by Donald Trump’s recent tariff announcements. Share prices among UK contractors have seen mixed impacts, and the long-term effects on the country remain uncertain. The Business Secretary has called on UK companies to help shape a national response, highlighting the significant nature of the situation. Industry leaders are closely monitoring how these geopolitical shifts will affect supply chains and material costs. With uncertainty around global trade and economic policies, companies must be prepared for ongoing changes that could impact their strategies.
Reeves’ announcement introduced several key initiatives: £2 billion for social and affordable housing, £625 million to train 60,000 new workers, and £13 billion for capital infrastructure over five years. However, only 41% of survey respondents believe this will drive investment into the sector. Some expressed concern over the Chancellor’s comments on a “changing world,” fearing that this volatility could harm investor confidence.
The April release of the S&P Global UK Construction Purchasing Managers’ Index (PMI) showed a slow start to the year, with output dropping for the third month in a row and input costs rising sharply.
Still, optimism exists. 65% of respondents said they are either somewhat or very confident about the sector’s future after the Chancellor’s announcements, and 32% forecasted more tender opportunities compared to 2024—suggesting a more positive outlook than might be expected.
So, which construction sectors are seeing the most opportunities? Our data points to data centres, residential, and education as the current frontrunners for tender activity. At Gleeds, we’re proud to be advancing and delivering projects across these high-performing sectors and more.
Other key discussion points in the report include the evolution of the Procurement Act and the water sector’s new Asset Management Period 8 (AMP8). Whether the Procurement Act will enhance social value remains to be seen—only 52% of respondents think it will. Meanwhile, just 34% believe AMP8 will be adequately resourced over the next five years.
The full report includes updates on inflation, commodity prices, labour availability, and materials, along with detailed sector spotlights for a more in-depth look at how each part of the industry is navigating current conditions.
As we move through the year, I look forward to continuing to work with our clients and colleagues to deliver projects that are shaping the UK’s future. The insights in this report offer a moment to reflect and strategise on how we can keep building progress—for the communities we serve and the industry as a whole.
We trust that the insights in this report will inspire new ideas and provide valuable guidance as we navigate the year ahead.
Construction is rarely a quiet sector to operate in, but 2025 has brought both encouraging developments and new challenges.”
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