Brian McArdle, Managing Director at Gleeds’ recently announced the launch of the Gleeds’ UK Market Report for Q3 2025.
He said: “Over the past three months, we’ve seen a lot of trends and changes impacting the industry.
“At the moment, the construction industry in the UK presents a fragile but cautiously stabilising picture. After strong growth in Q1, new orders fell sharply in Q2, driven by declines in infrastructure, industrial, and commercial projects, though many of our sectors have continued to thrive. August brought a partial rebound, bolstered by major healthcare and commercial projects, yet optimism remains muted, with firms citing slow project pipelines, regulatory delays, and weak consumer confidence.
“Construction output in July grew modestly for a second consecutive month (0.2%), with gains in new work offering some positivity on project delivery.
“Fewer firms declined tenders in Q3 compared with Q2, though three-quarters still reported doing so to some degree. Contractors continue to face squeezed margins, which rose slightly from 5.7% to 6.3% to absorb rising costs such as higher employer National Insurance Contributions. Insolvencies remain a major concern: construction accounted for 16.3% of all UK insolvencies in Q2, although total cases fell slightly from Q1. Specialised service firms were most vulnerable, and “significant distress” levels remain elevated across the sector.
“The wider UK economy is slowing, with GDP growth stalling at 0.2% in the three months to July 2025. Borrowing remains high at £60bn year-to-date, debt stands at 96% of GDP, and long-term borrowing costs have hit a 27-year high. Inflation reached 3.8% in July, and is forecast to peak at 4% before easing in 2026. Construction output in July grew modestly (0.2%), with gains in housing repair and infrastructure offset by weakness elsewhere. Industry sentiment remains split: over half of our Q3 survey respondents are pessimistic about prospects under the current government, citing unclear policies and regulatory delays.
“Labour shortages persist, with freelance and trade wages rising 3–5% annually, creating pressure for contractors to pass on costs. Vacancies have dropped sharply, though long-term workforce demand remains strong. Material supply chains are also fragile. Cement production has fallen to its lowest level since 1950, brick deliveries remain below prepandemic levels, and steel is now central to government industrial strategy. Commodity markets remain volatile: copper and nickel oversupply weighs on prices, while aluminium and cement face supply constraints.
“The sector continues to come under strain from rising insolvencies, inflation, and labour pressures, but we believe opportunities exist in public housing, healthcare, education, infrastructure and offices. Success will depend on converting government spending commitments into real project delivery, while safeguarding supply chain resilience.”
To read the report in full visit: www.gleeds.com/en/insights-and-reports/market-reports/uk-construction-market-report-q3-2025
