UK construction activity declines amid weak investment, but infrastructure pipelines indicate cautious optimism ahead.
Glenigan, a division of Hubexo, has released its February 2026 Construction Review, offering a detailed assessment of the UK construction sector performance. Covering the three months to the end of January 2026, the report analyses both major projects exceeding £100m and underlying activity below this threshold, with seasonally adjusted data providing a robust year-on-year comparison.
The findings present a clear picture of a sector under pressure, shaped by subdued economic conditions, reduced investor confidence, and fluctuating demand across key construction verticals.
Key metrics and economic pressures
The latest data signals a contraction across core construction indicators, reinforcing concerns around UK construction market performance in 2026. Project starts declined by 31% compared to the preceding three months, with overall values dropping by 20% against 2025 figures. This downturn reflects broader macroeconomic challenges, including weak GDP growth of 0.1% in Q4 2025 and reduced consumer spending.
Main contract awards also recorded a significant decline, falling 43% year-on-year and 37% compared to the previous quarter. Detailed planning approvals followed a similar trajectory, decreasing by 30% during the review period and sitting 33% lower than 2025 levels.
Rising production costs and constrained demand have limited project viability, while increased unemployment continues to place pressure on household incomes. This has had a direct impact on residential construction output and wider built environment activity.
Despite these challenges, survey data from the Chartered Institute of Procurement & Supply (CIPS) indicates stabilisation in manufacturing output and renewed growth in the services sector, suggesting that the decline in construction activity may be moderating.
Infrastructure and public sector construction pipeline offers stability
Public sector investment and infrastructure development are expected to play a central role in supporting the construction industry recovery.
According to Glenigan’s Economic Director, Allan Wilen, targeted programmes could stimulate sector growth: “Despite the disappointing numbers, there’s definitely hope on the horizon. The latest CIPS figures should inspire some optimism across certain quarters of the construction sector, particularly those involved in public works. A handful of key schemes, including the Hospitals Programme, the Schools Building Programme and a strong pipeline of infrastructure and utilities upgrades are set to kick-start UK construction out of neutral.”
He adds, “Of course an early interest rate cut would not only do wonders to restore dwindling consumer and business confidence, but also help get Britain building again.”
These insights reinforce the importance of government-backed capital investment in maintaining construction output and enabling digital construction transformation across infrastructure and public assets.
Education construction sector performance and regional growth trends
The education construction sector presented mixed results, highlighting uneven recovery patterns. Project starts increased by 29% year-on-year, while detailed planning approvals rose by 11% compared to the previous quarter. However, main contract awards declined by 28%, indicating delays in project progression.
Schools accounted for 72% of total starts, growing 33% year-on-year, supported by continued investment through national rebuilding programmes and RAAC remediation funding. Universities also showed strong growth, with activity rising 55%, while college construction increased by 9%.
Regionally, London led project starts, represented 22% of total value and achieved a 182% annual increase. Scotland recorded the strongest growth overall, with starts rising 319% year-on-year and planning approvals increasing by 147%. Yorkshire and the Humber also demonstrated notable expansion in approvals activity.
Community and amenity construction growth driven by public investment
The community and amenity sector delivered one of the strongest performances in the review period. Project starts surged by 125% year-on-year, while main contract awards increased by 22%.
Prison construction dominated activity, accounting for 63% of project starts following a 262% increase. Government buildings also expanded significantly, with growth of 207%. However, local facilities experienced a 7% decline, reflecting uneven investment distribution across sub-sectors.
The East Midlands recorded the highest growth in project starts, increasing more than twentyfold, while the North West saw activity rise fourfold compared to the previous year. Wales led detailed planning approvals, accounting for 35% of total approvals and achieving a 450% increase year-on-year.
Residential construction outlook 2026: Challenges and recovery indicators
Residential construction activity remains under pressure, with project starts falling 24% year-on-year and main contract awards declining by 33%. Detailed planning approvals also dropped by 34% compared to 2025 levels.
However, short-term indicators suggest potential recovery. Planning approvals increased compared to the previous quarter, and major project starts are beginning to stabilise. Rising UK house prices in January further support forecasts of a 6% increase in both private and social housing output in 2026.
Private housing accounted for 38% of project starts but declined by 51% year-on-year. In contrast, private apartment developments increased by 43%, and social housing starts rose modestly by 3%.
Regionally, the North West led growth in residential starts with an 87% increase, while London experienced continued contraction. The South East remained the most active region for planning approvals despite a 30% annual decline.
UK construction faces ongoing contraction, yet public investment, stabilising demand, and policy support provide a foundation for recovery, with digital construction adoption remaining central to long-term resilience.
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