At a Glance
UK construction activity is contracting in early 2026, with project starts down and insolvencies rising despite a modest uptick in February output. (Source: Construction Magazine)
Policy changes from 6 April 2026 tighten Construction Industry Scheme compliance and embed wider regulatory reforms without new headline measures this weekend. (Source: Saffery)
Major infrastructure and clean energy schemes – including Sizewell C and Hinkley Point C – continue to drive workload even as wider demand softens. (Source: SSE)
Cost inflation and labour shortages are set to persist, with building costs and tender prices forecast to rise by around 14–15% over five years. (Source: BCIS)
Retrofit and refurbishment are gaining strategic weight as the UKGBC pushes retrofit-first approaches for meeting net zero targets. (Source: BusinessGreen)
Today’s update: sector data for early 2026 shows a construction market under clear pressure, with contracting workloads, tighter regulation and stubborn cost and labour constraints, even as flagship infrastructure and energy projects keep the pipeline moving. Policy reform is shifting from headlines to hard compliance, and clients are having to rethink delivery models towards retrofit, resilience and productivity. Here’s what you need to know to stay ahead today.
Ongoing Stories
Following earlier coverage of skills and pipeline risks, new data shows UK construction PMI at 45.6 in March and 301 insolvencies in February, underlining that workforce gaps and corporate failures are now feeding directly into reduced project starts. (Source: Construction Magazine)
Building on previous focus on regulatory reform, the 6 April 2026 Construction Industry Scheme changes are now live, adding nil-return requirements and tougher anti-fraud checks that will increase admin load and risk for contractors and their supply chains. (Source: Saffery)
Infrastructure and clean energy delivery, previously highlighted as critical to the UK pipeline, continues to be reinforced by faster approvals for schemes such as Sizewell C and the Teesside SAF refinery, even as broader construction markets cool. (Source: GOV.UK)
Top 5 Headlines
🏗️ UK construction slowdown deepens despite February output uptick
UK construction project starts are falling across sectors in April 2026, with contractors and clients delaying schemes amid funding caution, Building Safety Act pressures and wider economic and geopolitical uncertainty. The construction PMI registered 45.6 in March, signalling continued contraction, and industry insolvencies hit 301 firms in February, suggesting mounting financial stress. While February output ticked up 1.0%, overall activity remains subdued and is increasingly polarised between major programmes and stalled smaller schemes. For the sector, this points to a trading environment where cashflow, risk allocation and balance sheet resilience are as critical as order books. (Source: Construction Magazine; ONS)
💰 CPA forecasts modest 2026 growth, led by infrastructure not housing
The Construction Products Association expects UK construction output to grow by around 1.7%–2.8% in 2026, with infrastructure providing most of the uplift. Residential and commercial demand are forecast to remain weak, constrained by labour shortages and cost inflation that continue to erode viability. This reinforces a two-speed market in which civils-heavy and public-backed programmes outpace private development, shaping where capacity and investment are likely to flow. (Source: Timber Development UK / CPA)
🏛️ CIS reforms raise compliance bar from April 2026
New Construction Industry Scheme rules effective from 6 April 2026 require contractors to file nil returns, comply with enhanced anti-fraud checks and cope with increased reporting complexity. These measures sit alongside a broader package of regulatory changes, including the Building Safety Regulator transition, planning reform consultations and payment/insolvency reviews. For main contractors and clients, the reforms will demand tighter controls over subcontractor verification, data quality and tax risk across project portfolios. (Source: GOV.UK; Saffery; Gowling WLG)
🌱 Clean energy approvals and nuclear builds anchor long-term workload
Government has accelerated approvals for clean energy projects, including the Sizewell C nuclear plant and Europe’s largest sustainable aviation fuel refinery in Teesside, as part of efforts to protect consumers from energy price volatility and support net zero. Hinkley Point C has now completed its reactor domes and moved to internal fit-out, with operation targeted for 2027. These schemes represent multi-year civils, M&E and specialist engineering opportunities that can offset weakness in other markets, but they will also compete aggressively for scarce skills and specialist suppliers. (Source: GOV.UK; SSE)
🌱 Retrofit-first agenda gains ground in built environment decarbonisation
A new UK Green Building Council report argues for prioritising retrofit over demolition and replacement to cut emissions from the built environment in line with climate goals. The blueprint emphasises whole-life carbon, deep refurbishment and smarter use of existing assets rather than newbuild by default. For developers, investors and contractors, this signals growing policy and market pressure to pivot towards refurbishment skills, supply chains and business models. (Source: BusinessGreen)
Also in the news
💰 ONS data to February 2026 shows construction output down 2.0% over the latest three months, with new housing the weakest segment, reinforcing the drag on residential pipelines. (Source: ONS)
💰 BCIS forecasts building costs rising by about 14% and tender prices by 15% over the next five years, suggesting continued pressure on margins and the need for robust inflation clauses. (Source: BCIS)
⚙️ Labour market analysis indicates the UK construction sector will need around 240,000 additional workers by 2030, keeping skills at the centre of delivery risk. (Source: Timber Development UK / CPA)
🏛️ Wider construction policy shifts continue through 2026, including planning reform consultations, payment and insolvency reform reviews, and new sector enforcement pilots launched this month. (Source: Gowling WLG)
🏛️ A £4m government innovation challenge fund is now live, targeting R&D that can reduce construction costs and speed up project delivery by 2030. (Source: GOV.UK)
The Daily Build is written for people steering UK construction and infrastructure decisions before 9 a.m. If this briefing sharpened your view of risk, regulation or pipeline, consider forwarding it to a colleague. Keeping sponsors, delivery teams and advisers aligned on these trends can strengthen your next project or investment call.