TPI Survey Feedback

WORKLOAD

The outlook for construction workload remains mixed, with steady activity in some sectors offset by hesitancy elsewhere. Clients are generally cautious and while enquiry levels remain healthy, the pace of conversion from feasibility to delivery is slow.

Residential development continues to face significant headwinds. High-density schemes are being delayed or cancelled due to affordability issues, rising build costs and regulatory pressures around the Building Safety Act. While the Government remains rhetorically committed to boosting housing supply, progress is being stymied by planning delays and limited local authority capacity. As a result, many projects are stuck in early stages, with viability assessments rarely translating into delivery.

By contrast, public sector investment is providing more reliable workload, especially in regulated infrastructure. Programmes like AMP8 in the water sector are driving strong pipelines, supported by long-term funding and policy imperatives. However, these projects are often delayed by complex approval processes, and their impact on workload volumes will be gradual rather than immediate.

Across the market, many report a high volume of feasibility work, but a lack of momentum behind new project starts. Clients are focused on de-risking and scenario testing, with few schemes progressing unless value, ROI and compliance requirements are fully aligned.

Some sectors are showing more resilience. Pharmaceutical and life sciences schemes are generating sizeable feasibility commissions, and the energy and engineering sectors appear less vulnerable to economic headwinds. Landlords, too, continue to invest in building upgrades at lease expiry, often with a focus on reducing operational carbon.

Despite hopes of recovering workloads this year, market activity has softened. Global economic uncertainty continues to stifle the progression of some schemes beyond feasibility stage, with clients hesitant to commit to construction amid volatile cost conditions and funding constraints. While this slowdown may help ease pressure on contractor capacity, it also raises concerns about the pipeline depth in sectors where viability and confidence remain fragile. Infrastructure and energy transition remain the most resilient areas of growth, supported by government-backed programmes and long-term policy goals, while residential and commercial (new build) markets are expected to stay subdued until confidence in the broader economic outlook improves.

MARKET CONDITIONS

Market conditions in the UK construction sector remain subdued, characterised by flat activity levels, cautious sentiment and a noticeably more selective stance from contractors. While workloads are holding steady in certain segments—most notably infrastructure and public-sector retrofit—the broader picture is one of stagnation rather than recovery. Growth remains elusive in most sectors and optimism is tempered by persistent economic headwinds.

Contractor confidence remains low. Tier 1 and Tier 2 firms continue to adopt a defensive posture, prioritising risk management over revenue growth. Rather than pursuing aggressive expansion, many are focused on preserving margins in the face of heightened delivery risk, unpredictable pipelines and lingering inflationary pressures. This has contributed to a tighter tendering landscape, where fewer bids are submitted—especially for projects perceived as commercially complex, or logistically challenging.

Where bids are being submitted, contractors are frequently building in higher risk allowances and margins to buffer against ongoing supply chain volatility, labour scarcity and programme risk. In effect, risk-adjusted pricing is contributing to upward pressure on costs in certain segments. As a result, although softer pipelines might ordinarily create conditions for price correction, the inclusion of risk premiums is helping to partly offset deflationary trends, particularly where supply capacity is limited or delivery risk remains high.

While some sub-sectors are experiencing increased bidding competition, this appears more symptomatic of falling workloads than of heightened market confidence. Contractors, particularly in commercial offices and speculative residential schemes, are chasing fewer opportunities. Pre-construction service agreements (PCSAs) are increasingly failing to convert into full delivery contracts. Delays at this stage often stem from developer caution, cost uncertainty and a still-fractured funding landscape. The result is a bifurcated pricing environment—more competitive in over-supplied segments, yet firm where contractor capacity is constrained or specialist expertise is required.

External macroeconomic dynamics are compounding these pressures. Direct exposure to US tariffs remains limited for UK construction, as the sector relies primarily European and Asian supply chains. The UK has not mirrored US tariff action and duties on US imports remain unchanged. The UK has not imposed new duties on US imports and recent developments—including a limited UK-US trade agreement—have reduced some bilateral friction, although the deal’s scope is narrow and its impact on construction is likely to be negligible.

More significantly, the US has temporarily lowered tariffs on Chinese imports for 90 days (from 145% to 30%), with China reciprocating by reducing its own tariffs on US goods (from 125% to 10%). While this may ease some global trade tensions and reduce the risk of further escalation, the short-term nature of the agreement limits its stabilising effect. For UK construction, the indirect consequences remain more relevant: global demand uncertainty, volatility in input pricing and weakened investor confidence.

Previous concerns about Chinese exporters “dumping” excess product into European markets—particularly steel and aluminium—may now ease slightly, though any price impact is expected to remain marginal and temporary. A more sustained slowdown in the US would still represent a key risk, potentially depressing UK capital markets and delaying client-side investment decision-making.

On the upside, expected interest rate cuts may offer some respite by improving scheme viability. Easing borrowing costs, coupled with tentative signs of recovery in planning approvals—thanks to recent government reforms—could lend mild upward pressure to workloads in late 2025. Nonetheless, this support is not expected to drive a rapid resurgence, but rather to act as a stabiliser for a sector still seeking equilibrium.

Looking forward, most market participants anticipate subdued growth and a patchy recovery for the remainder of 2025. However, pockets of resilience—particularly in infrastructure, public sector retrofit and fit-out—will provide some ballast, but the prevailing mood is one of cautious stability, with most waiting for clearer economic signals before re-engaging at scale. For now, stagnation—not contraction—best captures the current mood in UK construction.