The summer’s nascent signs of recovery are set to be blown away by autumnal winds, as the UK construction industry faces a “perfect storm” in the final quarter (Q4) of 2025, according to the latest analysis from Glenigan.
“If the August Review indicated that construction sector recovery was stalling, then September’s edition paints an even grimmer picture of an industry once again grappling in the grips of decline,” the industry intelligence provider said in the September edition of its Construction Review.
“What seemingly appeared to be renewed momentum over the summer, has been derailed by a succession of external socioeconomic events, from international turmoil to knee-jerk domestic policies which have crippled investor and consumer confidence alike.”
Focusing on the three months to the end of August, Glenigan’s analysis showed project starts declined by 22 per cent, a drop of more than a third on the same period last year.
Meanwhile, the value of main contracts awarded dropped by 33 per cent compared with the same period in 2024 and were 24 per cent lower than those awarded in the three months to the end of May this year.
Planning approvals fared no better – they were down 17 per cent compared with June-August 2024 and 48 per cent compared to the previous three-month period to the end of May 2025.
“Couple that with a general failure to launch on public projects, post-Spending Review, and it’s clear to see that summer is well and truly over, with contractors and subcontractors facing a perfect storm as they head into Q4 2025,” Glenigan said.
Its economic director Allan Wilen said the construction sector had, once again, suffered from socioeconomic uncertainty at home and aboard, which meant the “moment of sunshine” that had broken through in the second and third quarters was now being replaced by “dark clouds of decline”, with the residential sector hit hardest.
“Hiring freezes, rising unemployment and the slow approval of projects by the Building Safety regulator have curbed previous enthusiasm to get projects off the ground, evidenced by the particularly poor performance across the board,” Wilen said.
“Whilst there has been a modest uptick in non-residential performance, it’s nowhere near large enough to make up the difference. It all points to a challenging near-term outlook for the industry.”
That “modest uptick” was particularly noticeable in offices, which saw a 125 per cent increase in project starts in the three months to the end of August, compared with the same period in 2024. Hotel and leisure project starts were also higher by 23 per cent.
The community and amenity sector performed well, posting a 30 per cent increase in project starts in June-August compared to the same period last year, while main contract awards shot up by 120 per cent.
That was mostly down to prison and “blue light” project work, said Glenigan.
While overall planning approvals slumped, there was strength in civils where approvals jumped 171 per cent compared to last year.
Regionally, Wales took the lion’s share of approvals at 25 per cent with the total number worth £3bn. The North-West took 22 per cent of the approvals totalling £2.7bn, which itself was a 423 per cent increase on the same period in 2024.
Even in the bleakness of the residential sector there was some relief, especially in student accommodation where the value of starts and approvals doubled to just over £1bn.
Nonetheless, the latest data showed that overall housing project starts were down 10 per cent and main contract awards fell 44 per cent compared to June-August 2024.
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Matthew Davies