Q4 2025
Tender Price Indicator
Prospects for future growth remains strong, but the UK construction sector closes 2025 in a finely balanced position. Delivery remains broadly steady, but confidence has softened as decision-making slows. Current workloads are being underpinned by legacy projects, while many new starts and investment decisions remain on pause pending clarity from the Autumn Budget. The market feels active but hesitant, with schemes stalled at the conversion stage as clients await clarity on capital allocations, taxation and planning reform.
Financing conditions remain restrictive, and public-sector decision-making slow, reinforcing a defensive posture across much of the industry. Contractors are prioritising pipeline protection over expansion, maintaining selective bidding strategies and tightening commercial discipline while awaiting firmer policy and demand signals.
Input costs are stable, with materials prices broadly flat and supply chains functioning efficiently. The main inflationary pressure now lies in labour and compliance, particularly across MEP and regulated sectors, where skills shortages and new safety requirements continue to raise delivery costs. Wage growth has moderated from recent peaks but remains structurally high, keeping labour a key driver of cost tension even in a subdued market.
This report has been prepared and published ahead of the forthcoming Autumn Budget. Measures announced in the Budget could affect our outlook — particularly in relation to taxation, planning reform and the scale/timing of public sector investment — and may therefore require an update to the assumptions set out here.