Waiting for the upturn, building the backbone
At a Glance: 2026 forecasts point to modest construction growth led by infrastructure, even as housing planning approvals sit at a 15-year low.
At a Glance: Highways England’s £24bn RIS3 programme and the £50bn AMP8 water spending round position roads and utilities as key demand drivers.
At a Glance: HS2, the Transpennine Route Upgrade and the Lower Thames Crossing move towards major delivery phases from 2026, with private finance expected to play a bigger role.
At a Glance: New data confirms construction output fell every month in 2025, with November marking the weakest quarter since March 2023.
At a Glance: Government launches a rolling three‑year review of gigabit broadband coverage to steer the next wave of digital infrastructure investment.
Today’s update: sector data from late 2025 underline how sharply output and housing approvals have fallen just as a new wave of infrastructure and utilities work lines up for 2026 and beyond. Private finance, digital networks and long-term programmes like RIS3, AMP8 and HS2 are emerging as the main stabilisers in an otherwise fragile market. Here’s what you need to know to stay ahead today.
Ongoing Stories
Following earlier coverage of pressures on the UK’s construction pipeline, new 2025 output data show activity declined every month last year, with a 1.3% fall in November and the weakest three‑month performance since March 2023, reinforcing concerns over delivery capacity and confidence. (Sources: ONS, BD Online)
Building on recent discussion of planning reform and housing delivery, fresh analysis confirms planning permissions for new homes fell to 42,000 in Q3 2025, a 15‑year low, adding to the headwinds for residential pipelines. (Source: PBC Today / Glenigan)
Extending the focus on infrastructure as a growth driver, updated 2026 outlooks highlight roads (RIS3), water (AMP8) and energy schemes as the main sources of new work, contrasting with ongoing weakness in wider building markets. (Sources: Pinsent Masons, Turner & Townsend alinea)
Top 5 Headlines
💰 Infrastructure-led growth expected to offset weak building markets in 2026
Market analyses from early January suggest the UK construction sector will return to growth in 2026, with particular momentum in onshore wind, battery storage, nuclear small modular reactors and the water sector as AMP8 ramps up. The UK market is estimated at USD 325.33bn in 2026 and forecast to grow at 3.77% CAGR to 2031, with infrastructure projected to expand fastest at 7.9% CAGR. This points to a two‑speed market where civils and energy work help sustain workloads while commercial and residential remain under pressure. (Sources: Pinsent Masons, Turner & Townsend alinea)
🚆 HS2 enters intensive delivery phase between Old Oak Common and Birmingham
HS2 tunnelling is now complete between Old Oak Common and Birmingham Curzon Street, with 2026 works set to focus on remaining tunnel boring operations and major bridge construction. This marks a shift from preparatory to high‑value civils and structural packages along the core route. For contractors and suppliers, the programme is moving into a period of sustained demand for complex engineering, logistics and finishing trades. (Source: HS2 YouTube update)
🚆 Transpennine Route Upgrade secures £589m to accelerate design
The Transpennine Route Upgrade has been allocated £589m to speed up design work on key sections, including the corridor between Huddersfield and Dewsbury. The project will double track capacity and improve journey times on this strategic east–west rail link. Early design acceleration should pull forward opportunities for multidisciplinary teams and help de‑risk later construction phases. (Source: Turner & Townsend alinea)
🚆 Lower Thames Crossing to advance under mixed public–private finance
The Lower Thames Crossing, a 14.5‑mile new road including what is set to be the UK’s longest road tunnel (2.6‑mile twin bore), is due to start construction in 2026 with an estimated cost of £9.2–10.2bn. Government has committed around £590m, with the remainder expected from private finance as part of Highways England’s £24bn RIS3 programme for 2026–31. The scheme will be a flagship test for blended funding models on major highways and a significant pipeline anchor for large civils contractors. (Source: The Highfield Company)
🏛️ Project Gigabit launches rolling broadband market review
Building Digital UK has opened the Project Gigabit National Rolling Open Market Review for consultation, establishing triannual reviews of gigabit‑capable broadband coverage over the next three years. The process is designed to update the government’s understanding of commercial and subsidised rollout plans across the UK and identify areas still requiring intervention. This creates a clearer pipeline for digital infrastructure investors and contractors, particularly in rural and hard‑to‑reach areas. (Source: UK Government)
Also in the news
💰 Turner & Townsend alinea reports that private capital is expected to play a larger role in 2026 infrastructure programmes as government budgets tighten, influencing risk allocation and procurement models. (Source: Turner & Townsend alinea)
🏗️ Glenigan’s January 2026 Construction Index describes a “bittersweet” end to 2025, with persistent declines in project starts and approvals despite expectations of a medium‑term rebound. (Source: PBC Today / Glenigan)
🏗️ The S&P Global construction PMI rose to 40.1 in December 2025, remaining in contraction territory but indicating a slower pace of decline as firms look ahead to 2026 infrastructure work. (Source: Pinsent Masons)
🚆 Eastern Green Link 1, a multi‑billion‑pound 2GW HVDC interconnector linking Scottish renewables to North East England, is progressing and will provide additional transmission capacity for offshore and onshore generation. (Source: The Highfield Company)
💰 Analysts note ongoing financial, demand and labour challenges from late 2025, with weak client confidence and delayed investment decisions still weighing on order books as 2026 begins. (Sources: Pinsent Masons, PBC Today / Glenigan)
The Daily Build is written for people shaping the UK’s construction and infrastructure pipeline, from boardrooms to site offices. If today’s briefing is useful, consider forwarding it to colleagues planning bids, budgets or programmes for 2026.