At a glance
UK construction is forecast to return to steady growth from 2026, but recent output falls and record profit warnings underline a fragile recovery.
Planning reform and new funding for local authorities aim to unlock housing delivery, even as residential starts slump and developers sit on their hands.
Major schemes from Gatwick’s runway to new offshore wind and data centres are set to anchor the next construction cycle, supported by a new national infrastructure body.
Energy price volatility and slow capacity growth are keeping pressure on operating costs just as the sector ramps up net-zero delivery.
Today’s update: forecasts point to a medium-term rebound in UK construction driven by infrastructure, data centres, housing and clean energy, but they land against weak late‑2025 output, tighter margins and persistent workforce challenges. In parallel, government is pushing planning and regulatory reform while repositioning life sciences and energy security as national infrastructure priorities. Here’s what you need to know to stay ahead today.
Ongoing Stories
🏛️ Following earlier coverage of the Planning and Infrastructure Bill and Building Safety Act changes, today’s updates confirm the Planning and Infrastructure Act 2025 is now moving into force from February and April 2026, with new consent routes designed to speed up major schemes.
🚆 Returning today, the DLR extension to Thamesmead is again highlighted as a core regeneration project, now framed explicitly alongside other top 2026 schemes and the wider 10‑Year Infrastructure Strategy pipeline.
🏛️ Building on recent focus on renters’ rights and leasehold reform, today’s material pins late‑2026 as the target for phase 2 private rental reforms and a new commonhold framework, adding timing detail for investors and developers.
🌱 Continuing the theme of clean energy planning and grid upgrades, today’s energy update stresses that UK capacity growth is lagging global trends amid cost rises and delays, intensifying the challenge of delivering the Clean Power 2030 Action Plan.
Top 5 Headlines
💰 UK construction set for 3.2% annual growth from 2026–29
UK construction output is projected to grow at an average annual rate of 3.2% between 2026 and 2029, driven by investment in infrastructure, data centres, housing and renewables. Early‑2025 data shows new orders rebounding, with private industrial orders doubling and commercial work up 51.4%, pointing to a strengthening pipeline. Alongside traditional transport and energy megaprojects, trends around retrofit, embodied carbon, BIM and AI are expected to shape delivery and productivity. This matters because it signals a medium‑term upturn, but one that will reward firms positioned for decarbonisation, digitalisation and industrial clients rather than relying solely on speculative housing. (Source: PBC Today, Construction Management, BusinessWire)
🏗️ Housing market stabilises but new build starts plunge
The UK residential market is showing early signs of stabilisation, with national prices flattening and buyer enquiries improving sharply in January 2026, led by Scotland, Northern Ireland and the North. First‑time buyers now account for around 55% of transactions thanks to better affordability, even as southern regions remain constrained. However, residential construction starts dropped 24% in the last quarter and 32% year‑on‑year as developers delay schemes pending clearer market and policy conditions. This divergence between demand and supply points to tightening medium‑term housing stock and opportunities for well‑capitalised developers once confidence and planning clarity improve. (Source: RICS, Brick Weaver)
🏛️ Government pumps £48m into local planning capacity
Ministers have committed £48m to recruit 350 additional planners to help accelerate housebuilding, alongside the recently passed Planning & Infrastructure Bill aimed at streamlining consents. The move is intended to tackle long‑standing bottlenecks in local authority planning teams that have slowed both residential and infrastructure projects. With further private rental and leasehold reforms due in late 2026, the policy framework for housing delivery is being reshaped on multiple fronts. This matters because delivery timetables – and risk profiles – for schemes will increasingly depend on how fast this new capacity translates into approvals on the ground. (Source: North Lincs Council, GT Law)
🚆 £2bn‑plus schemes headline 2026 project pipeline
Gatwick Airport’s £2.2bn Northern Runway project, starting August 2026, sits alongside the £1.5bn G Park 1 London Docklands data centre and the £1.5bn Inch Cape Offshore Windfarm as flagship UK projects for 2026. These add to ongoing programmes such as HS2 Euston, the Lower Thames Crossing, Sizewell C and the DLR extension to Thamesmead, all supported by the 10‑Year Infrastructure Strategy. Together they represent a multi‑sector, multi‑year workload spanning aviation, energy, rail and logistics. This concentration of big‑ticket schemes will shape capacity, tendering strategies and regional labour markets over the rest of the decade. (Source: Barbour ABI, Gov.uk)
🏛️ New infrastructure authority and life sciences status tighten focus on critical assets
Julia Prescot CBE has been appointed Chair of the new National Infrastructure and Service Transformation Authority (NISTA), which will oversee the delivery of major projects and public service transformation. In parallel, the life sciences sector has been reclassified as Key National Infrastructure in England and Wales, bringing stricter limits on protests to safeguard operations. These moves sit alongside the phased implementation of the Planning and Infrastructure Act 2025 to support delivery of energy, transport and health projects. For investors and contractors, this signals a more interventionist state around “strategic” sectors, with potential implications for risk allocation, security and engagement with local stakeholders. (Source: Gov.uk, Burges Salmon, Charles Russell Speechlys)
Also in the news
⚙️ UK construction output fell 2.1% in Q4 2025, with new work down 2.6% and repair and maintenance down 1.5% across seven of nine sectors, highlighting how weak the starting point is for the forecast recovery. (Source: ConstructionWave)
💰 Profit warnings among listed construction firms have climbed to pandemic‑era levels, driven by contract delays, Building Safety Act complexity, labour shortages and rising wage and NI costs, intensifying pressure on margins. (Source: EY, Construction Leadership Council)
⚙️ Forecasters see modest 2026 construction output growth of around 1.7–2.8%, with housing starts up 2–5% and infrastructure near 4%, supported by MMC uptake, data centre demand and planning reform. (Source: Turner & Townsend)
🌱 Analysts warn that UK power capacity additions are lagging the global average due to rising costs and delays, even as Clean Power 2030 plans advance, posing risks for clients reliant on secure, low‑carbon electricity. (Source: Womble Bond Dickinson)
The Daily Build is written for people shaping the UK’s construction and infrastructure pipeline, from boardrooms to site offices. If this briefing is useful, consider forwarding it to colleagues preparing bids, budgets or investment cases this week.