UK Construction Market Report Q2 2026
Executive summary
I’m pleased to introduce our Gleeds UK Market Report for Q2 2026, which captures the very latest sentiments of the construction industry at a time where domestic and geopolitical events are constantly evolving.
Geopolitics remains the dominant near-term concern for construction, with 39% of respondents ranking global conflicts as the biggest threat, although this is down from 50% last quarter. Interest rates, inflation and investor confidence remain the next key risks, each cited by around one in five respondents.
This suggests caution is still high, but there is some optimism following the US-Iran peace agreement and resumed shipping through the Strait of Hormuz. The fall in crude oil prices since the 17 June memorandum of understanding is also encouraging, as geopolitical instability continues to be seen as a trigger for fuel, transport, and materials cost inflation.
The market is responding by increasing cost vigilance. Six in ten respondents are checking material or labour prices more regularly, mostly monthly, while 19% of organisations have contingency plans for import disruption. Common measures include pre-ordering and storing materials, using alternative products, and relying more on local suppliers.
Earlier procurement and faster technical sign-off in D&B contracts were highlighted as important ways to limit exposure to price volatility.
The current political environment and government leadership change is negatively affecting investor confidence, according to 55% of our respondents. However, there is strong support for reforming approvals for critical energy and infrastructure projects, with 81% backing proposals to limit court challenges except on human rights grounds.
The public sector pipeline remains comparatively strong, while private sector viability is under pressure in many regions. Infrastructure is now among the strongest tender opportunity areas, supported by the government’s expanded 10-year infrastructure pipeline, now covering £718bn of projects and programmes. Data centres and education also remain attractive sectors.
Meanwhile, contractors are still selective. Once again, the majority of contractor respondents (89%) said they or their supply chain declined a tender in Q2. Pricing reflects risk awareness rather than optimism, though margins are gradually rebuilding, reaching 6.4% in Q2.
The overall picture, therefore, is one of cautious stabilisation. If political stability improves over the summer and trade disruption eases, market conditions may settle. But if conflict concerns persist into autumn, further pressure on pricing, availability and risk allowances is likely.
As ever, 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. You can learn more about our tender price inflation forecasts, new orders and tendering, political and economic context, labour and materials trends in the sections that follow.
I hope you find the insights useful as we navigate the summer months and beyond.
Geopolitical instability continues to be seen as a trigger for fuel, transport, and materials cost inflation.
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