Construction growth continues — but economic risks grow

The Construction Products Association (CPA) has released its Summer Forecasts for 2025, predicting 1.9% growth in total construction output this year, followed by 3.7% in 2026 — in line with its Spring outlook. However, the CPA also warns that rising economic uncertainty could hold back progress, especially in housing and infrastructure.

Growth is expected to be driven by the three largest construction sectors: private housing new build, housing repair, maintenance and improvement (rm&i), and infrastructure. But delays to new project starts, weak consumer confidence, and the prospect of tax rises or capital spending cuts in the Autumn Budget present notable risks.

Private housing output is forecast to rise by 4.0% in 2025 and 7.0% in 2026, as major housebuilders recover from recent lows. However, small developers face viability challenges, and high-rise and Build-to-Rent schemes continue to be delayed by long waits at the Building Safety Regulator.

In the rm&i sector, government-funded energy-efficiency retrofits and cladding safety works are supporting activity. But general home improvement spending remains subdued due to household caution following recent inflation. Growth of 2.0% in 2025 and 3.0% in 2026 is expected—though much of it may come late, depending on economic sentiment.

Infrastructure output is projected to grow by 1.9% this year and 4.4% in 2026, underpinned by megaprojects like HS2 and Hinkley Point C, plus investment in energy and utilities. But the CPA flagged mounting delays and cancellations in roads and rail, as well as doubts over future National Highways funding.

Rebecca Larkin, CPA head of construction research, said: “The fundamentals point to gradual growth, but uncertainty is now the defining factor. Everything hinges on the timing—when mortgage rates fall, when consumer confidence returns, and when planning delays ease.”

She added that potential tax rises or capital budget cuts in the next Spending Review could affect not just private housebuilding, but also public sector projects such as schools, hospitals, and transport infrastructure.

Why this matters to the UK concrete sector

The CPA's forecast signals mixed prospects for concrete suppliers and contractors. Demand from housebuilders and infrastructure clients is slowly improving, creating opportunities for ready-mix, precast, and concrete frame contractors.

But inflation legacies, planning delays, and possible cuts to public sector spending mean firms should remain cautious, particularly when planning capacity and investment.