At a glance
UK construction is edging into recovery territory for 2026, with modest output growth forecast despite weak housebuilding.
Commercial and industrial new orders surged through late 2025, underpinning a stronger medium-term pipeline.
The Chancellor’s Spring Forecast confirms weaker economic growth and higher unemployment but leaves core infrastructure intentions broadly intact.
Ofgem’s April–June price cap cut will reduce household and some business energy costs, against a backdrop of falling wholesale prices.
Today’s update: signals of a cautious construction upturn are emerging just as the wider economic outlook softens and energy costs begin to ease from recent highs. For project sponsors, the balance between improving demand, fiscal constraint and persistent delivery challenges will shape decisions through mid‑2026. Here’s what you need to know to stay ahead today.
Ongoing Stories
Following earlier coverage of pressure on the UK’s £530bn construction and infrastructure pipeline, new market forecasts now point to 1.6–3% growth in 2026, with infrastructure and industrial work expected to offset still‑weak housing output.
Returning to the structural risk theme around delivery capacity, updated data show new orders up 9.8% quarter‑on‑quarter and 29.3% year‑on‑year in Q3 2025, reinforcing concerns that skills, costs and planning could be the main brakes on converting this demand into built assets.
After recent focus on policy and regulation, the Chancellor’s Spring Forecast speech adds a macro layer: downgraded GDP growth and rising unemployment, but with no major cuts flagged to infrastructure spending, implying tighter conditions but continued political backing for key programmes.
Building on prior discussion of energy affordability and its impact on occupiers, Ofgem’s latest price cap move will cut typical household dual‑fuel bills to £1,641 from April, helped by wholesale price falls and removal of some policy costs, offering modest relief on running costs for homes and businesses.
Top 5 Headlines
🏗️ UK construction set for modest 2026 recovery despite housing drag
Analysts now expect UK construction output to grow by roughly 1.6–3% in 2026, after annual growth of around 1.8–1.9% in 2025 despite a 1.1% contraction in the three months to November. Forecasts suggest total construction could expand by about 2.8% this year, with new housing potentially rising close to 4.9%, helped by anticipated lower borrowing costs and continued infrastructure spending under programmes such as the £24bn Road Investment Strategy 3 from 2026. However, housebuilding remains in contraction territory, with a PMI reading of 39.3, and the overall outlook is still clouded by high input costs and affordability constraints. For contractors and developers, this points to a patchy but improving market where sector mix and risk pricing will be critical. (Source: pinsentmasons.com; buildersmerchantsnews.co.uk; ons.gov.uk; constructionmanagement.co.uk)
💰 New orders surge in late 2025 underpinning medium‑term workload
New construction orders jumped 9.8% quarter‑on‑quarter in Q3 2025 and 29.3% year‑on‑year, driven largely by industrial and commercial projects. This upswing comes despite recent output softness and suggests a strengthening pipeline feeding into 2026, particularly away from traditional housebuilding. The divergence between order books and near‑term output reinforces that delivery capacity, not demand, may be the binding constraint for many supply chains. (Source: ons.gov.uk; constructionmanagement.co.uk)
🏛️ Spring Forecast confirms slower UK growth but keeps infrastructure on the agenda
The Chancellor’s Spring Forecast on 3 March cut the UK’s 2026 growth outlook to 1.1% and projected unemployment rising to 5.3%, reflecting global headwinds including Middle East tensions affecting energy markets. The statement referenced infrastructure investment and economic stability but did not announce major new construction schemes or visible cuts to existing programmes. For the sector, that means a tougher macro backdrop but continued political emphasis on capital spending as a growth lever. (Source: gov.uk; itv.com; rte.ie)
🌱 Ofgem to cut energy price cap by 7% from April
Ofgem has confirmed the energy price cap for a typical dual‑fuel household will fall by £117 (7%) between 1 April and 30 June 2026, taking annual bills to £1,641—an 11% year‑on‑year reduction. The drop reflects falling wholesale gas and power prices, aided by mild weather, strong renewable generation and weak LNG demand in Asia, alongside the removal of around £150 of government environmental and social policy costs from bills. While campaigners say this only partly reverses previous increases, lower operational energy costs may marginally improve affordability for households and some occupiers. (Source: ofgem.gov.uk; smart-energy.uk; thecanary.co)
🌱 UK energy demand eases as primary consumption falls
Recent data indicate UK primary energy consumption has fallen by about 3.5%, alongside February 2026 wholesale trends that saw gas prices down 6.9% and power prices nearly 12%. This shift is attributed to mild weather, robust renewable output and subdued Asian LNG demand, which together are loosening supply–demand pressures. For energy‑intensive construction materials and industrial clients, sustained demand‑side easing could support more stable input costs, albeit from an elevated base. (Source: gov.uk/statistics; smart-energy.uk)
Also in the news
🚆 Core national programmes such as the £24bn Road Investment Strategy 3 (starting 2026) and the £50bn AMP8 water investment round (2025–2030) remain in delivery, continuing to anchor infrastructure workloads despite the lack of new scheme announcements this week. (Source: pinsentmasons.com; buildersmerchantsnews.co.uk)
🏗️ Government housing ambitions remain set at 1.5 million homes by 2029, even as planning delays, material and wage inflation, and affordability issues keep near‑term housebuilding subdued. (Source: pinsentmasons.com; constructionmanagement.co.uk)
💰 Business sentiment has improved, with around 38% of construction firms expecting output growth, signalling cautious confidence despite macroeconomic downgrades. (Source: buildersmerchantsnews.co.uk)
🚆 Talks over private finance settlements for the Lower Thames Crossing are reported to be progressing, though no new formal announcements have been made in the past two days. (Source: pinsentmasons.com)
🏛️ No significant planning or local plan decisions were reported on 4–5 March, underscoring that current sector dynamics are being driven more by macro and programme‑level signals than by individual scheme news. (Source: pinsentmasons.com)
The Daily Build is written for people shaping the UK’s construction and infrastructure pipeline. If this briefing is useful, consider sharing it with a colleague before your next board, bid or strategy meeting.