Written by the Leading Edge team – 22nd June 2026
June has brought a significant political development for the UK construction sector, with Sir Keir Starmer announcing his resignation after two years as Prime Minister.
While political leadership changes inevitably create uncertainty, the industry reaction has highlighted a broader issue that extends beyond any individual government. The construction sector has seen a steady stream of announcements, reforms and commitments over recent years, but many businesses remain frustrated by the gap between policy ambition and delivery on the ground.
At the same time, the latest data suggests that while conditions remain challenging in the short term, there are growing reasons to believe that parts of the UK construction market could be better positioned for growth from 2027 onwards.
The question facing the industry is no longer simply whether the right policies exist, but whether they can be implemented quickly enough to unlock investment, improve confidence and support delivery.
Construction policy: ambition is not the issue
Few would argue that the past two years have lacked ambition.
The construction sector has seen significant policy activity, including planning reform, mandatory housing targets, the introduction of the National Infrastructure and Service Transformation Authority (NISTA), proposals to improve payment practices, and continued efforts to address building safety challenges.
Planning reform in particular has remained a central focus, with changes to the National Planning Policy Framework designed to accelerate development and increase housing delivery.
However, despite these initiatives, many industry leaders argue that tangible improvements remain difficult to identify.
Commenting on the current position, several trade bodies have highlighted the slow pace of implementation, with concerns that many of the reforms announced over recent years have yet to translate into meaningful improvements in project delivery, workload levels or business confidence.
This reflects a wider frustration across the UK construction industry. The strategic direction is broadly supported, but many businesses remain focused on what happens next rather than what has already been announced.
UK construction output remains subdued
The latest Office for National Statistics (ONS) figures provide further evidence of a market that continues to face challenges.
Monthly construction output increased slightly in April 2026, rising by 0.1% compared with March. However, the annual picture remains significantly weaker.
Total construction output was 1.0% lower than a year earlier, while new work declined by 4.8% over the same period.
Housing continues to be one of the weakest performing sectors:
- Private housing output fell by 8.2% year-on-year
- Public housing output declined by 12.6%
- Infrastructure output fell by 4.2%
- Private industrial construction declined by 10.9%
In contrast, repair and maintenance activity remained more resilient, with private housing repair and maintenance increasing by 8.3% compared with April 2025.
The figures suggest that while activity has stabilised compared with the sharp declines seen in previous periods, conditions across much of the UK construction market remain challenging.
Housebuilding recovery remains elusive
Housing continues to be the sector facing the greatest pressure.
Recent updates from major housebuilders have highlighted ongoing concerns around affordability, development viability, regulatory requirements and buyer confidence.
Industry commentary suggests that many developers remain cautious about committing to new sites, particularly given continued uncertainty around borrowing costs and sales rates.
This caution is reflected in the latest output data, where private housing remains one of the weakest areas of construction activity.
The industry’s ambition to increase housing delivery remains clear, but achieving the levels required to meet national targets continues to look increasingly difficult.
Construction forecasts point to stronger growth from 2027
Despite current challenges, there are reasons for cautious optimism.
According to Glenigan’s Summer 2026 Construction Forecast, underlying project starts are expected to decline by 1% during 2026 before recovering strongly from next year.
Project starts are forecast to increase by:
- 11% in 2027
- 4% in 2028
By the end of the forecast period, activity is expected to be approximately 13% higher than 2025 levels.
Several sectors are expected to outperform:
Education construction
Education project starts are forecast to rise by 8% in 2026 and a further 20% in 2027, supported by funding for school rebuilding and refurbishment programmes.
Healthcare construction
Healthcare project starts are expected to increase by 9% this year, followed by further growth in 2027 and 2028 as investment in NHS facilities, diagnostic hubs and community care infrastructure progresses.
Infrastructure and utilities
Infrastructure remains one of the strongest medium-term opportunities for the construction sector.
Water investment is expected to increase significantly following Ofwat’s approval of £104 billion of upgrades and repairs between 2025 and 2030.
Meanwhile, major energy and transport projects including Hinkley Point C, Sizewell C, electricity network upgrades and rail investment are expected to support future demand.
These forecasts suggest that while current conditions remain difficult, the foundations for future growth are gradually being established.
Skills remain one of the industry’s biggest challenges
The latest Construction Workforce Outlook from CITB highlights another challenge facing the sector.
The report estimates that the UK construction industry will need an additional 41,200 workers every year between 2026 and 2030 to meet expected demand.
In total, the industry is expected to require around 206,000 additional workers over the next five years.
The challenge is particularly important because many forecasts now point towards stronger construction activity from 2027 onwards.
The industry therefore faces a difficult balancing act:
- managing current market weakness,
- maintaining training and recruitment activity,
- and preparing for future growth.
Without sufficient investment in skills and workforce development, labour shortages could become a major constraint on future delivery.
Infrastructure investment continues to offer opportunities
One of the most positive themes emerging during 2026 has been the continued commitment to long-term infrastructure investment.
Build UK recently highlighted the importance of the Government’s 10-year infrastructure strategy and the publication of a pipeline containing more than £700 billion of planned work.
While concerns remain around delivery timescales and implementation, the scale of planned investment provides a degree of confidence that opportunities will continue to emerge across infrastructure, utilities, energy and civil engineering markets.
For many suppliers and manufacturers serving the construction sector, these areas may provide some of the strongest growth opportunities over the coming years.
Final thoughts from Leading Edge
June’s developments reinforce a theme that has been building throughout 2026.
The UK construction sector is not lacking ambition, policy announcements or long-term opportunities. Instead, the challenge lies in turning those ambitions into projects, investment and activity on the ground.
Current conditions remain difficult. Housing output is weak, new work continues to decline and many businesses remain cautious.
However, longer-term forecasts for infrastructure, education, healthcare and housing suggest there are still reasons for optimism.
The gap between ambition and delivery remains one of the defining issues facing the construction sector today.
For manufacturers, suppliers, contractors and investors, understanding where activity is likely to emerge first will be critical.
At Leading Edge, we continue to support businesses across the built environment with market research, customer insight and market intelligence, helping organisations understand changing market conditions and identify future growth opportunities.
Sources
Construction News; ONS; BCIS; Glenigan Summer 2026 Construction Forecast; CITB Construction Workforce Outlook; Build UK
Written by the Leading Edge team – 22nd June 2026
