Construction industry trends

UK construction industry forecast

Recently I attended the Glenigan Construction Industry Forecast 2025-2026 at the characterful Midland Hotel off St Peter’s Square in Manchester, UK. As ever, an insightful event with excellent external speakers whose knowledge and following of the construction market conditions I'm in awe of.

Some interesting takeouts for me; despite the previous 24 months of restraint for the construction sector, there's optimism that 2025 will see more expansive activity.

Demand and investment in construction

Evidence that latent demand built up from unactioned and time limited planning approvals will provide stimulus. A forecast of relatively stable interest rates and impatient buyers will stoke UK construction demand in the housing market. And the perception that the new UK government will release new funding, especially in the areas of education, health and railways.

But the but… looking back at this time last year when a similar optimism existed, have some of the fundamental constraints in our industry been lifted to allow this expansion? Public and private sector funding alike needs to become available. Projects take time to build, will funding be available soon enough? Equally, is the construction sector still suffering from a loss of labour and skills following the pandemic and the subsequent contraction we’ve had? With an ageing workforce are we losing the opportunity to pass skills down? How much will this slow productivity?

Construction lead times and productivity

Two really interesting trend graphs were shown which I found quite striking. First, the extent to which the lead time from planning approvals to project starts and then project completion has increased over the last two years and is set to remain extended. Secondly, a comparison of the productivity gains made in the construction industry (which appears to be none) over the last decade compared to the manufacturing sector, which has been hugely positive.

This productivity gap is not just about skills but working practices and the adoption of digital technology.

At Biosite, we see a lot of digital transformation in the construction sector - our focus being access control systems and workforce management software, underpinned by the latest biometric technology. This is driven largely by health & safety, as well as site security functions in contractors. However, digital construction spans many parts of the construction process.

I'd be interested in others’ thoughts on this. Is construction lagging behind in digital transformation? Are some parts of the construction process adopting digital improvements better than others?

Exporting digital construction – how can we share UK innovation internationally

I also had the opportunity to attend the Digital Construction Exports Group (DCEG) SME Engagement Event as part of a discussion on sharing UK innovation in construction internationally.

Hosted by Connected Places Catapult (CPC), this was attended by an intriguing mix of Tier 1 Contractors, Consultants and a number of innovative SMEs involved in digital construction technology. Allied with members from the Department for Business and Trade (DBT), it meant for a rich and varied discussion on improving the export potential of digital construction products and services.

Innovation in construction technology  

It's evident that UK plc, from a construction technology perspective, has a lot to offer. Presenting itself as unified sector, especially in the context of digital innovation is often the challenge. Knowing what that looks like and developing a relevant route-to-market that engages interested stakeholders outside of the UK in the construction brief, design specification and/or tender – and at the right time – is a particular challenge for SMEs. This is where in-country DBT representatives can support with market knowledge and local contacts, and, importantly, they have a significant role to play in bringing the digital construction community together.

Construction in the UK has been having a hugely tough time over the last 24 months, but that has not stopped innovation. Whilst the same headwinds have been faced elsewhere, my sense is that the digital journey we have been on in the UK – for health & safety, project planning, sustainability and workforce management (to name a few) – is a great proposition to export.

2025 construction industry predictions

Construction is a significantly important sector for the UK economy; yet the productivity gap is a stark reminder of the progress that still needs to be made. Those in the industry will be acutely aware of the significant number of administrations and insolvencies in our industry; the government’s Insolvency Service has consistently reported that construction makes up 17% of all company insolvencies in England and Wales.

With the expectation of funding stimulus to boost construction projects in several verticals in 2025, there will be pressure on contractors to accelerate project completion lifecycles. With a fundamental loss of labour and skills in the industry, re-investment in the next generation of construction workers is required. To close the productivity gap, though, investment and adoption of digital working practices and the continued adoption of technology is ever more fundamental. I look forward to seeing what next year brings for the construction industry.