UK Construction Market Report 2Q 2025
Executive summary
Once again, it’s been a busy three months in the world of construction. I’m proud to be introducing our Gleeds UK 2Q Market Report, which takes a look at what’s been happening, and what it means for the industry as a whole.
Global tensions have defined our sector in recent months, with 24% of respondents to our quarterly survey citing these as the biggest threat to construction. Meanwhile, interest rates and inflation also scored highly as major concerns, as well as supply chain capacity.
Insolvencies remain a significant source of unease. As an industry, we continue to see the highest level of business failures – 4,032 in the 12 months leading to April 2025 – and nearly a quarter of respondents to our market survey say this has affected projects they were working on. Risk appetite is running scarce: 97% of contractor participants declined tenders in 2Q, increasing from 75% in 1Q. Most told us this was due to apprehension over proposed conditions, or a heightened risk profile.
There are also ripples of concern across the industry following the launch of the Immigration White Paper, with the fallout in terms of how more restricted immigration might worsen construction’s skills gap yet to be seen. Although 51% of our respondents believe there will be no change following the updated laws, 43% expect things will get worse in this regard.
But, despite the uncertain conditions we’re operating in as an industry, there is cause for optimism. According to our survey, there is significant demand in sectors including residential, education, defence and data centres. The number of projects making the most of digital tools has also increased compared to our past data.
In addition, the UK government has unveiled a raft of recent announcements which directly impact the construction industry, and allow many of our sectors to look towards a future with greater promise. These include the Spending Review, in which the Chancellor of the Exchequer spoke of “renewing Britain”, and provided greater funding for major infrastructure, housing, healthcare and energy projects. With the introduction of further updates – including the 10-Year Infrastructure Strategy, the Strategic Defence Review and the Modern Industrial Strategy – there’s a huge amount for the industry to make the most of, in helping to reshape how the UK looks in decades to come.
Our sector leads share more on the details of these within our sector spotlights, later in the report.
As a reminder, our quarterly market report is uniquely informed by our extensive survey which is completed by construction professionals from across our network, and reviewed by our cost experts here at Gleeds. In the pages that follow, you can learn more about tender price inflation forecasts, new orders and tendering, political and economic context, labour, commodities and materials.
Against a backdrop of economic turmoil, rising costs and issues with labour, shoots of hope can clearly be seen through government investment, digital advancement and regulatory reform. How we collaborate to deliver projects as an industry is up to us all to take forward.
I hope you enjoy the insights that follow.
...despite the uncertain conditions we’re operating in as an industry, there is cause for optimism.
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