Glenigan’s Autumn 2026 Construction Forecast maintains that sector growth will revive in 2027, despite a challenging year of market decline
The UK Construction Industry Forecast 2027-2028 provides a comprehensive overview of the construction industry’s current decline and a forecast for the next two years.
Glenigan’s 2027-2028 Forecast reappraises the predictions from the Summer 2026 edition, while maintaining the broad expectation that the sector will start seeing the green shoots of recovery next year, with further gains over the next 24 months.
UK construction has experienced an unusually long period of decline – 2026 will close this way
UK construction has experienced an unusually long period of decline, reflecting developments in the macro economy.
The Russia-Ukraine war forced the industry to find new supply arrangements. Then, conflict between the US, Israel and Iran pushed energy prices, inflation and borrowing costs higher. Living costs rose, and the labour market weakened. Momentum and enthusiasm for new projects soon faded.
Private sector work has been hit hardest, with fluctuating financial viability affecting many schemes. Build costs are high, lending has tightened, and demand has softened in some sectors. As a result, numerous projects have been redesigned, delayed or cancelled.
Unsurprisingly, given the events of the past six months, 2026 will finish on a low note, posting an overall construction decline of -13%.
This figure is far lower than expected earlier in the year, prompting Glenigan to fully re-evaluate its Summer Forecast predictions. This double-digit decline in the construction sector is prompted by persistent socio-economic turmoil, ongoing international conflict and lingering political uncertainty, which the new Burnham-led government has yet to overcome.
Could there be a silver lining in 2027?
However, despite these challenging circumstances, Glenigan’s Economics Unit, which researched and produced this Forecast, predicts an industry-wide uptick in UK construction activity in 2027 (+11%) and 2028 (+7%).
Whilst these figures are lower than those calculated in the summer, sustained growth will likely emerge, supported by a combination of increased public sector spending and a tentatively improving private sector appetite for investment in residential and commercial projects.
Looking ahead to 2027 and beyond, Allan Wilen, Glenigan’s economic director, sees a silver lining to the current overcast cloudscape: “Momentum is picking up, particularly as funds from the Spending Review are released, and public projects, utilities upgrades and critical infrastructure investment gradually start to come online.
“We believe this, combined with impetus in specific private sector niches like offices and data centres, will have a fortifying effect across the rest of the industry. It could potentially spark a chain reaction leading to sustained recovery in the second half of next year, which may be maintained throughout 2028.”
A push for growth: How can this recovery be supported?
Wilen explained: “Public sector spending is where we expect the recovery to begin. Backed by the School Rebuilding Programme, the New Hospital Programme and water investment under AMP8, education, health and civil engineering verticals are all expected to grow steadily next year.
“Social housing is also expected to grow in both 2027 and 2028. When public schemes start moving, private investors are more likely to follow, and we expect that to build from the second half of 2027, although it depends on funding turning into construction starts.”
He continued: “As seen many times before, an uptick in public sector starts will likely send a positive signal to the private sector. Alongside an improving economic outlook, this should help thaw currently frosty investors, encouraging them to revive existing schemes or bring new projects online; although many have to make a significant climb from a very low position to get back in the black.”
