UK Construction Sector Forecast for 2026

2025 has felt like a grind for many in construction. Higher borrowing costs, political change and Autumn Budget uncertainty have all made clients nervous and delayed schemes getting to site. But most of the major forecasters are now pointing to 2026 as the year the industry starts to move back into forward gear, rather than just coping with headwinds.

Below is a practical look at what 2026 is likely to mean for UK contractors, housebuilders and the wider supply chain – with a particular focus on the labour and skills implications that matter to an agency like Approach Personnel.

Overall outlook: modest but meaningful growth
The Construction Products Association’s latest Autumn forecasts suggest total UK construction output is set to grow by around 2.8% in 2026, after a weaker 2025. constructionproducts.org.uk
Official government commentary on building materials and components paints a similar picture, with output projected to rise by roughly 3–3.5% in 2026 and to accelerate again into 2027. GOV.UK
In short, 2026 is not a “boom” year, but it is expected to be a clear step up from 2024–25 – enough to ease some pressure on order books and drive selective hiring.

Key growth drivers by sector

Private housing
After two very difficult years for housebuilding, forecasters are cautiously optimistic about a turnround.
• The CPA expects private housing output to grow by around 4% in 2026 as mortgage rates edge down and consumer confidence stabilises. Timber Development UK
• Glenigan’s latest industry forecast points to a broader housing recovery, with underlying project starts rising again from 2026 and a much stronger uplift in 2027. Planning, Building & Construction Today
For contractors and trades in residential, that should translate into more sites re-starting, phased releases on stalled schemes and renewed appetite for both site labour and site management.

Infrastructure
Infrastructure is expected to remain the “anchor” of the industry.
• The CPA forecasts infrastructure output growth of roughly 3.9–4.4% in 2026, supported by major transport, energy and utilities programmes. Timber Development UK+1
• The new UK Infrastructure Pipeline outlines around £530 billion of public and private projects over the next decade, including large commitments in transport, energy, health, education and digital. GOV.UK+1
While individual flagship schemes will continue to face political scrutiny, the broader pipeline for civil engineering, utilities, highways and rail looks solid – supporting steady demand for skilled trades, plant, groundworks, civil engineering professionals and project managers.

Industrial and logistics
Shifts in manufacturing, e-commerce and energy transition continue to support industrial and logistics work.
• CPA analysis suggests industrial output could grow by around 2–3% in 2026, following strong increases in 2025 tied to warehousing, manufacturing upgrades and energy projects. Timber Development UK
• Energy and water continue to show robust workloads in RICS surveys, reflecting ongoing investment in networks, renewables and resilience. RICS
This should mean continued demand for steelwork, concrete, M&E, fit out and specialist trades around data centres, distribution hubs and advanced manufacturing plants.

Repair, maintenance and improvement (RM&I)
RM&I has quietly become one of the most important pillars of UK construction. With many major new-build schemes delayed, work on existing assets is keeping many firms busy.
• Government forecasts point to RM&I growing by around 2.5% in 2026, steady but unspectacular. GOV.UK
• Within that, energy efficiency upgrades, fire safety remedial work and small-scale refurbishments are likely to stay strong.
RM&I is labour-intensive, which tends to support consistent demand for multiskilled trades, small works supervisors and site managers comfortable managing fast-turnaround programmes.

Commercial
The commercial picture remains more mixed. Office and retail new-build are still affected by hybrid working patterns and changing consumer behaviour. However:
• Refurbishment and re-positioning of existing commercial assets – for example, turning older offices into flexible workspaces, labs or mixed-use schemes – is a growing niche.
• Regional cities with strong university, life sciences or tech clusters are still seeing selective investment.
Fit-out, refurbishment and change-of-use specialists can expect a busier 2026 than 2024–25, even if headline “shiny new building” announcements remain relatively limited.

Costs, materials and tendering conditions
The era of double-digit material price inflation appears to be behind us, but cost pressures have not disappeared. Recent government statistics show materials price growth moderating sharply through 2025, although prices are settling at a higher base level than pre-COVID. GOV.UK
For 2026, the most likely scenario is:
• More stable material pricing, with selective pressure on specialist products.
• Labour remaining the main inflation driver on many projects.
• Tenders becoming more competitive again as firms look to secure backlog in the first half of the year, before conditions tighten in 2027.
Contractors who can demonstrate strong programme certainty and reliable access to labour will be in a better position to protect margins.

Labour market: skills shortages are not going away
Even with only moderate output growth, the industry will struggle to find enough people. The Construction Industry Training Board (CITB) expects UK construction output to grow by around 2.1% per year on average through to 2029, and estimates that hundreds of thousands of additional workers will be needed by the middle of the decade to deliver projected workloads. CITB+1
For 2026, key workforce themes are likely to include:
• Persistent shortages in experienced site managers, project managers, QSs, planners and H&S professionals.
• Ongoing pressure in core trades such as bricklaying, drylining, joinery, groundworks, plant and finishing trades.
• Continued demand for white-collar support in commercial, design, pre-construction, logistics and site administration as projects ramp back up.
This will keep wage pressure elevated in the most in-demand roles and make workforce planning – both temporary and permanent – a critical board-level issue rather than something handled ad hoc.

Risks to watch in 2026
The forecast isn’t risk-free. Factors that could dampen growth include:
• Slower than expected interest-rate cuts, keeping financing costs high for developers and housebuilders.
• Further tax or spending changes in response to wider economic conditions. The Office for Budget Responsibility has already trimmed UK GDP growth expectations for 2026 to around 1.4%. Reuters
• Delivery risk around the Infrastructure Pipeline if planning, consenting or funding bottlenecks aren’t addressed. BCIS+1
• Ongoing uncertainty around major schemes such as HS2 and airport and road expansions, which can affect regional supply chains even when smaller projects remain healthy. thetimes.com+1
Most contractors are therefore planning 2026 as a year of selective growth, careful risk management and a focus on operational efficiency, rather than rapid expansion at any cost.

What this means for contractors, housebuilders and subcontractors
For most firms, 2026 is likely to feel like this:
• Order books improving, particularly in housing, infrastructure and industrial.
• More tenders coming to market – but clients still very cost-conscious and focused on delivery reliability.
• Rising competition for the best site managers, engineers, commercial staff and trades.
• Continued pressure to meet net zero goals, ESG expectations and modern methods of construction targets on both public and private work.
Those with a clear workforce strategy, robust supply chains and strong relationships with their labour and staffing partners will be better placed to take advantage of the upturn without over-stretching.

How Approach Personnel can support your 2026 plans
As a construction-specialist recruiter, Approach Personnel sits right in the middle of these trends every day – from trades and labour on live sites to white-collar roles in commercial, technical and management.
Going into 2026 we expect:
• Higher demand for reliable temporary labour as more projects kick off and programmes tighten.
• Increased requirements for experienced site and project managers who can drive programmes, manage safety and hold standards on busy, multi-phase schemes.
• Ongoing growth in housing, infrastructure and industrial clients looking for both temporary and permanent support.
If you are planning your workforce for 2026 – whether that is shoring up existing teams, covering peaks in workload, or preparing for new framework wins – we can help you map likely pressure points and secure the people you need ahead of time.