The UK construction sector continues its journey toward recovery, but the latest Glenigan Construction Review, reveals that the pace remains frustratingly sluggish, especially for major construction projects.
Covering performance data from April to June 2025, the report provides a comprehensive analysis of both major projects (valued over £100 million) and underlying projects (under £100 million), offering invaluable insights for built environment professionals and construction stakeholders.
Signs of recovery, but still off-pace
The July 2025 Construction Review indicates a modest overall uptick in construction starts, with project commencements rising by 6% compared to Q1 2025 and 3% year-on-year. However, these encouraging figures are overshadowed by a significant downturn in both main contract awards and planning approvals—key indicators of future construction activity.
- Main contract awards fell by a stark 24% compared to 2024 and by 32% against Q1 2025.
- Planning approvals also declined, down 22% on the quarter and 3% year-on-year.
This divergence signals that while some parts of the industry are showing signs of resilience, broader construction sector recovery is being stifled by a weak major projects pipeline.
Underlying construction activity remains robust
Amidst the mixed landscape, underlying project activity is proving to be the sector’s saving grace.
In the three months to June 2025, underlying project starts soared by:
- +49% compared to Q1 2025
- +25% year-on-year
The residential construction sector led the way, with a remarkable 76% quarterly increase and a 64% jump compared to the same period last year. The non-residential sector also contributed, showing a 21% rise from Q1, although it saw a slight 3% dip year-on-year.
However, this strength in starts was not mirrored in contract awards or planning approvals, both of which declined across all underlying verticals, raising concerns about the longevity of current momentum.
Major project stagnation slows industry-wide growth
In contrast, major project performance has been significantly underwhelming.
Starts on-site, contract awards, and planning approvals all declined for large-scale developments, dragging down overall industry metrics. According to Glenigan, this stagnation is largely driven by persistent macroeconomic challenges:
- Slow economic growth
- High operational costs
- Delayed investment decisions—both private and public
These factors have caused substantial delays in funding approvals and contract negotiations, especially for critical infrastructure and large public-sector projects.
Industry outlook: a recovery delayed, not derailed
Allan Wilen, Economic Director at Glenigan, offers a balanced perspective: “While the underlying market—which represents the majority of UK construction activity—is in relatively good health, the major projects sector remains volatile. This is why the broader figures are less encouraging than those featured in Glenigan’s July Index, which focuses solely on underlying activity.”
Wilen adds that optimism remains, pointing to the recent Government Spending Review, which promises a significant funding injection aimed at reviving stalled infrastructure projects.
“We’re still only weeks out from a comprehensive Spending Review that pledges substantial support for the sector. This should help energise major project activity in the near term and beyond.”
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