As we reach the end of another year and start looking ahead to the next, what will 2025 bring for the construction industry? With Glenigan publishing its Industry Forecast for 2025-2026, we take a closer look…
It’s clear that 2024 has been something of a transition year, with both economic and sector recovery underway – could we be turning the corner? A slowly improving UK economy should lift construction activity over the next two years, with a brighter economic outlook forecasted to help the industry gather strength and bring confidence to private sector investment. Lower inflation has also paved the way for a gradual easing in interest rates, that should bolster business confidence.
While public funded investment was temporarily disrupted by the General Election and change of government, it is hoped that this new period of political stability will provide greater clarity and confidence, allowing government departments to progress existing projects over the coming year.
Delving deeper and civil engineering has had a relatively buoyant 2024, with further growth anticipated for 2025 and 2026 due to the strong project pipeline and significant government investment. Following a 6% decline during 2023, underlying civil engineering project starts (under £100 million) have rebounded strongly in 2024, with a predicted total increase of 26%.
This progress is expected to grow steadily over the next two years, largely driven by utilities projects. While water companies have proposed doubling capital investment for AMP8 to £96 billion, a substantial increase in investment is also expected for the energy network. From offshore and onshore wind to supporting and strengthening the existing infrastructure, all of this will underpin the sector growth over the next two years.
Rail is another sector that is forecasted a boost as we head into 2025, with the Labour Budget promising support for major rail projects, including the connecting rail tunnel between HS2 and London Euston, the TransPennine route upgrade and East-West rail link.
Taking a step back, it is clear that an improving economy and new government policies will both strengthen and shift construction activity across different regions in the UK. Interestingly, it is the North of England that is set to see the biggest benefits of this, currently forecast to outperform London and the South, as government funding is focussed on the country’s economically weaker areas.
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