Q3 2025
Tender Price Indicator
The UK construction sector enters late 2025 in a finely balanced position. Input costs have largely stabilised and material availability is broadly steady, but labour remains a persistent pressure point—particularly for specialist roles and complex packages. While headline inflationary risk has receded, forward pipelines are under strain, with slower project conversion, delayed public sector decisions and protracted regulatory processes—most notably around the Building Safety Act—limiting momentum.
Contractors are adapting strategies to navigate procedural friction, selective demand and tighter risk appetites. Activity is steady in parts—particularly infrastructure, healthcare and regulated utilities—but confidence remains brittle, underpinned more by legacy workload than by new project starts. Residential new-build is the weakest segment, with viability gaps, slow planning and funding uncertainty weighing heavily, while fit-out, refurbishment and life sciences are holding up comparatively well.
The wider UK economic backdrop remains challenging. GDP growth forecasts for 2025 have been revised down to around 1.0–1.1%, with business confidence slipping further into negative territory amid concerns over rising costs, policy uncertainty and sluggish demand. Inflation is proving stickier than expected, limiting the scope for rapid monetary easing despite the Bank of England’s recent rate cut to 4.00%. With consumer sentiment fragile and investment decisions being delayed, near-term economic conditions are likely to remain subdued, adding to the sector’s cautious tone.