The UK construction sector made a strong comeback in June, with contract awards jumping by 33% to £6.8 billion, according to the latest data from Barbour ABI. This rebound comes after a quieter performance in May and signals renewed optimism across the industry, particularly in infrastructure, which led the resurgence thanks to the Labour government’s ambitious spending review.
Infrastructure Investment Fuels Growth
June’s standout performer was the infrastructure sector, which saw contract awards soar to £2.2 billion—a 125% increase from the previous month and the highest monthly total since February. Rather than being buoyed by a single megaproject, the uplift was supported by a broad spread of high-value infrastructure projects across the UK.
This upswing follows the Labour government’s announcement of a £275 billion public infrastructure investment plan over the next decade. With major funding commitments on the table, analysts believe the sector could be entering a new phase of sustained growth.
“Following the spending review, these are exactly the kind of figures Keir Starmer and Rachel Reeves will want to see after a challenging few weeks in parliament,” said Ed Griffiths, chief analyst at Barbour ABI. “Given how heavily infrastructure featured in the review, all eyes will be on whether this marks the beginning of a sustained period of growth.”
Offshore wind and battery storage projects boost approvals
Planning approvals also surged by 113% in June, driven in part by the Ossian Offshore Wind Farm and supported by a wave of clean energy initiatives. Among the most notable were two major battery storage schemes in the West Midlands, with a combined value of £210 million, reflecting growing investment in the UK’s renewable energy infrastructure.
Planning applications overall rose 22%, showing renewed investor and developer confidence in the market, especially within the energy and infrastructure sectors.
Residential construction still struggling to regain momentum
While infrastructure is booming, the residential construction sector continues to face challenges. Contract awards in June reached £1.75 billion—a modest 5% increase, but still below the 2024 monthly average. The top residential scheme was a £125 million mixed-use development on Chalk Farm Road in London, which includes student accommodation, private flats, and commercial space.
This shift toward mixed-use and high-density developments underscores a trend away from traditional social housing as developers adapt to economic pressures and changing regulatory requirements.
Compounding the issue, new residential planning applications fell sharply in May, down 33% from the previous month. Post-Grenfell safety regulations continue to delay high-rise projects, though some optimism remains.
“There are signs of future momentum for high-rise residential, particularly with responsibility for the Building Safety Regulator now sitting directly under DLUHC,” Griffiths noted. “This could help accelerate progress on schemes delayed by post-Grenfell safety requirements. Our data shows some projects delayed by up to nine months, likely due to the impact of the Building Safety Act.”
Government ambitions to boost social housing may also play a role in turning the tide. The Deputy Prime Minister’s recent pledge to invest £39 billion in delivering 300,000 social homes has sparked cautious optimism.
“It’s an encouraging signal,” said Griffiths. “But as ever, targets and delivery are two very different things. Whether the UK can build at this scale remains an open question.”
Planning activity remains mixed amid market uncertainty
While June saw a 34% increase in the total value of planning approval, reaching £10.92 billion, the value of new applications dipped by 19% compared to April, settling at £7.2 billion. This mixed picture reflects ongoing uncertainty in parts of the UK construction market, particularly in sectors more exposed to regulatory or economic constraints.
The latest data offers a cautiously optimistic outlook for the UK construction sector. Infrastructure is driving growth, buoyed by substantial public investment and energy transition projects. However, residential construction remains in flux, grappling with regulatory delays and weak planning activity.
As the second half of 2025 unfolds, the sector will be watching closely to see if this recovery takes root—and whether the government’s ambitious plans translate into tangible delivery on the ground.
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