But tender price inflation forecast remain the same
The construction industry is set for a 鈥榗autious recovery鈥� despite global economic uncertainty, according to Arcadis.
The consultant鈥檚 summer 2025 UK Construction Market View report said that despite 鈥渟ticky inflation鈥� threatening to slow the rate of interest cuts, there were tentative signs of recovery.
It pointed to improving industry sentiment on the back of government interventions on planning reform and a broadly positive spending review, as well as a recovery of lost momentum in new orders.
Health, education, prisons and housing were identified as big winners from the spending review鈥檚 pivot to social infrastructure, while the report also noted recent improvement in the trading performance of contractors.
Simon Rawlinson, Arcadis鈥� head of strategic research and insight, said: 鈥淲hile economic headwinds persist, the construction industry maintains cautious optimism for the future, thanks in part to new government investment and support.
鈥淥ur latest analysis highlights that whilst recovery is at an early stage, positive momentum in key sectors such as network infrastructure, together with spending review surety in the public sector, provides a foundation for longer-term sustained growth.鈥�
However, the report said contractors鈥� pre-construction capacity was a constraint on the ability of the supply chain to respond to an increase in development activity.
It said this was true 鈥減articularly for residential specialists who had previously worked based on a streamlined, single-stage, integrated design and build model鈥�.
It added: 鈥淧aradoxically, delays affecting schemes procured using two-stage processes are creating an opening for single-stage procurement for larger new-build projects constructed outside of HRB requirements, including commercial offices.
鈥淐lients can leverage the prospect of relatively quick and certain turnover to secure a beneficial design and build risk transfer. Given the highrisk profile, this model suits Tier 2 contractors rather than well-established Tier 1s.鈥�
It said this trend had so far been most evident in commercial markets outside London and represented a 鈥渇urther evolution of the contractor market鈥�, with Tier 1s focused on the most complex and high-risk schemes.
Arcadis鈥� tender price inflation forecasts remained unchanged as it waited for stronger signs of recovery.
| Regional 星空传媒 Construction inflation | London 星空传媒 Construction inflation | National Civil Infrastructure inflation | National Network Infrastructure inflation | |
|---|---|---|---|---|
|
2025 |
2-4% |
2-4% |
3-5% |
4-6% |
|
2026 |
3-5% |
3-5% |
3-5% |
4-7% |
|
2027 |
4-5% |
4-5% |
3-5% |
4-7% |
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