The latest Gleeds Market Report has painted a cautious but stabilising picture of the UK construction industry, highlighting both opportunities and persistent challenges as the sector navigates a shifting political and economic landscape.
While construction market sentiment has improved slightly in recent months, optimism remains fragile. The report found that fewer than half of respondents feel positive about the sector’s outlook, a sharp contrast to the 70% who, just a year ago, believed the industry was a key priority for the incoming Labour government.
Labour’s construction pledges: progress or stagnation?
Labour’s manifesto commitment to “get Britain building again” raised expectations for a wave of public and private investment. However, the latest survey results indicate frustration within the sector, as many professionals feel that a lack of clear strategy and slow progress on delivery has undermined confidence.
Key policy interventions, such as planning reform, housing delivery targets, and infrastructure investment, have yet to gain significant traction on the ground. As a result, the industry is looking for stronger signals from government to support long-term growth and drive project pipelines forward.
Inflation, interest rates, and global unrest remain key threats
According to the Gleeds Market Report, interest rates and construction inflation are still seen as the greatest risks to growth. These financial pressures are compounded by concerns over supply chain capacity, investor confidence, and geopolitical instability.
Although construction insolvencies remain at historically high levels, there are tentative signs of improvement. Only 15% of respondents reported project delays linked to company collapse in the last quarter, despite construction still accounting for around 17% of all UK insolvencies in the year to July.
This suggests that while vulnerabilities persist, the industry is gradually adapting to the challenging trading environment.
Supply chain resilience shows signs of recovery
Encouragingly, tender activity appears to be stabilising. The report notes that 45% of firms or their supply chain partners had refused a tender in the past three months – a significant improvement from 80% at the same point last year.
Proposed legislation banning cash retentions in construction and introducing penalties for late payments is also seen as a potential driver of supply chain resilience. More than a third of respondents agreed that such measures would have a positive impact, particularly for SMEs and subcontractors who are often the most vulnerable to cashflow pressures.
Sector opportunities: housing, healthcare, and infrastructure
Despite the challenges, Gleeds identifies substantial opportunities in public housing, healthcare, education, infrastructure, and commercial construction.
Brian McArdle, Managing Director at Gleeds UK, commented: “Our Market Report shows a fragile but gradually stabilising picture of construction under a Labour government. The sector continues to come under strain from insolvencies, inflation, and labour pressures, but opportunities do exist in public housing, healthcare, education, infrastructure and commercial. Success will depend on converting government spending commitments in these areas into real project delivery, while safeguarding supply chain resilience.”
This highlights a growing need for digital construction solutions, modern methods of construction (MMC), and Building Information Modelling (BIM) to deliver efficiency and cost certainty across major programmes.
Building safety regulator impact: improving but still a challenge
The report also examines the impact of the Building Safety Regulator (BSR) on project delivery. In Q2, 37% of respondents said their projects had been delayed due to BSR processes. This figure has since fallen to 25% in Q3, reflecting early improvements following the government’s decision to move the regulator away from the Health and Safety Executive (HSE).
However, the BSR is still perceived as a significant barrier to progress, particularly in residential schemes across London, where compliance requirements continue to impact project timetables and cost management.
Outlook: A sector at a crossroads
The Gleeds Market Report underlines a construction industry in transition. While the sector is showing signs of resilience – with insolvency pressures easing, tender refusals falling, and optimism stabilising – confidence in government delivery remains muted.
To unlock growth, stakeholders across the built environment are calling for:
- Clearer government direction on housing and infrastructure policy
- Stronger action to address late payments and retentions
- Continued investment in digital construction technologies to improve productivity
- A balanced approach to regulation that supports safety without stifling delivery
For now, the sector remains fragile, but with targeted policy support and a commitment to innovation, the path towards a more stable and sustainable construction market is within reach.
Read next: A new era of active model-based planning in construction – Build in Digital
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