At a glance
UK construction is forecast to return to modest growth in 2026, led by civils and housing, despite ongoing insolvency and labour pressures.
A £725bn public infrastructure pipeline is underpinning demand, but recent output data show a weak end to 2025 and continuing pressure on private housing.
Government has set out sweeping reforms to construction product regulation and building safety in response to Grenfell, alongside wider planning and judicial review changes.
Ofgem’s latest energy price cap cut and growing renewables capacity are reshaping the energy cost and grid backdrop for projects.
Holcim’s Tilbury plant upgrade underlines continued investment in low‑carbon materials as the sector prepares for tighter standards.
Today’s update: new forecasts point to a fragile construction recovery in 2026, propped up by public infrastructure and residential work, just as Whitehall accelerates regulatory reforms spanning construction products, building safety and planning. Energy price shifts and low‑carbon materials investment add another layer to cost and delivery decisions on live schemes. Here’s what you need to know to stay ahead today.
Ongoing Stories
Following earlier coverage of skills and insolvency risk in the £530bn–plus project pipeline, new 2026 forecasts now quantify a 1.5% output rebound led by civils and housing but warn that labour shortages and smaller‑firm failures will continue to threaten delivery. (Source: Atradius)
Building on previous reporting of post‑Grenfell regulatory change, the government’s new Construction Products Reform White Paper sets out concrete proposals to regulate critical products, restore certification transparency and strengthen enforcement powers. (Source: Gov.uk)
Continuing the theme of infrastructure planning reform, fresh government moves now target reductions in judicial reviews of major projects and streamlining of decisions, signalling a firmer push to de‑risk delivery timelines. (Source: Gov.uk)
Ongoing decarbonisation efforts, previously highlighted around clean energy planning, are complemented by Ofgem’s latest energy price cap cut and new consultations on emissions reporting and heat networks, tightening the policy framework for low‑carbon delivery. (Source: Ofgem)
Top 5 Headlines
💰 Construction to grow 1.5% in 2026 as civils and housing take the lead
Atradius forecasts UK construction output growth of 1.5% in 2026, with civil engineering up 5.4% and residential building up 3.5%, underpinned by a £725bn public infrastructure pipeline across energy, transport and utilities. Residential completions are expected to rise from 68,000 in 2025 to 80,000 in 2026, although delivery still looks off‑track against the government’s 1.5m homes by 2030 ambition. The outlook is tempered by labour shortages, project delays and elevated insolvency rates among smaller firms, which are only expected to ease slightly. For developers, contractors and lenders, this points to selective growth opportunities but continued fragility in parts of the supply chain. (Source: Atradius)
🏛️ Post‑Grenfell Construction Products Reform White Paper sets tougher regime
The government has published its Construction Products Reform White Paper (25 February 2026), proposing a new regulatory framework for product safety and accountability following the 2025 Green Paper and Grenfell Inquiry findings. Measures include regulating critical products, restoring transparency around third‑party product certification, and giving enforcement bodies strengthened civil and criminal sanctions. The Grenfell Inquiry annual report released the same day also flags plans for a single regulator by 2028–29 and further legislation between 2027 and 2029. This package signals a materially tighter compliance environment for manufacturers, specifiers and clients, with significant implications for product selection, assurance and liability on future projects. (Source: Gov.uk; Gov.uk)
💰 Output fell 2.1% in Q4 2025 as private housing dragged, but year still up 1.8%
ONS data show UK construction output declined 2.1% in Q4 2025 versus Q3, led by a 3.6% fall in private new housing, although total output for 2025 was still 1.8% higher than 2024. The building construction market is valued at £118.2bn in 2026 with 93,605 businesses, and a 2.2% CAGR is forecast over 2021–2026. The figures underline a market in transition, with a soft patch in late 2025 but a broadly expansionary medium‑term trend. This divergence means order books tied to public infrastructure may prove more resilient than those exposed to discretionary private housing spend. (Source: ONS)
🏗️ Holcim Tilbury upgrade to boost low‑carbon cement capacity by end‑2026
Holcim UK reports that steelwork for its new vertical roller mill at Tilbury Cement Works is nearing completion, with the mill structure due to complete in spring 2026 and the grinding system by year‑end. The investment will enable greater use of ground granulated blast‑furnace slag (GGBS) and recycled fines in cement production, supporting lower‑carbon products. For major clients working towards net‑zero targets, expanded low‑carbon cement capacity will broaden specification options and could influence embodied‑carbon baselines on large schemes. (Source: Holcim)
🌱 Ofgem cuts energy price cap 7% as renewables and grid upgrades advance
Ofgem has announced a 7% (£117) reduction in the domestic energy price cap for April–June 2026, reflecting relatively stable wholesale markets amid mild weather and secure supply. In parallel, UK offshore wind and wider renewables capacity continues to expand, backed by ongoing Contracts for Difference rounds and targeted funding for grid upgrades to cut curtailment. The combination of easing retail prices and a more robust, renewables‑heavy grid has implications for energy‑intensive construction operations and for long‑term running costs on new developments. (Source: Ofgem)
🚆 AECOM calls for sovereign data centre framework to secure digital infrastructure
AECOM has urged government to adopt a sovereign data centre framework to secure the UK’s AI and digital infrastructure future, integrating energy system and regional growth considerations. The firm argues such a framework would support strategic siting, power availability, and planning for data‑intensive facilities, aligning with broader decarbonisation and levelling‑up goals. For infrastructure planners and investors, this suggests data centres will increasingly be treated as critical national infrastructure with more structured policy support and scrutiny. (Source: AECOM)
Also in the news
🏛️ Government consultations continue on English planning reforms aimed at unlocking stalled housing and infrastructure sites, alongside confirmation that the Building Safety Levy on new residential schemes is scheduled for October 2026. (Source: Gov.uk)
🌱 The government and industry are progressing new standards and consultations on emissions reporting and heat networks as part of the net‑zero transition, adding further technical requirements for developers and asset owners. (Source: Ofgem)
🏗️ The UK building construction market now comprises 93,605 businesses, underscoring a highly fragmented supply base even as insolvencies among smaller firms remain elevated. (Source: ONS)
🏗️🏛️ The Grenfell Inquiry government annual report reiterates plans for a single construction regulator by 2028–29 and new legislation from 2027–2029, signalling a long runway of regulatory change for the sector. (Source: Gov.uk)
⚙️ Key 2026 industry award programmes – including the Construction News Awards, British Construction and Infrastructure Awards, NFB Awards of Excellence and RIBA UK Regional Awards (shortlists now out) – are progressing, offering visibility opportunities for high‑performing project teams. (Source: Industry listings)
The Daily Build is written for people shaping the UK’s construction and infrastructure pipeline. If this briefing is useful, consider forwarding it to colleagues before the 9 a.m. project meeting.
To stay sharp on delivery, risk and regulation, keep this update handy for your next bid review or investment committee.