Despite budget-related uncertainty easing, activity remains constrained by delayed spending, though there is growing optimism that activity could pick up as infrastructure spending projects advance and borrowing costs decline.

Firms’ optimism is tied to expectations of rising infrastructure spending, especially in utilities, with easing inflation supporting demand across construction.

Budget-related uncertainty had initially restrained spending and contributed to weak sales pipelines as the year closed.

The housebuilding subindex dropped to a 2020 low, signaling a deep slump in housing construction amid weak demand and fragile client confidence.

The December reading missed market expectations, underscoring a slowdown well below growth threshold.

Budget developments and a planned mansion tax from 2028 are noted as potential headwinds for housing and construction activity.

Analysts expect only modest growth or continued subdued activity in 2026 for construction amid entrenched negative sentiment and limited impact from budget measures and rate cuts.

Builders report fragile client confidence and reduced workloads due to weaker demand and delayed investment decisions ahead of the autumn Budget.

Survey respondents describe fragile client confidence and reduced demand, contributing to smaller workloads as the year ends.

Clients delaying investment decisions ahead of the autumn Budget further reduced workloads and weakened sales pipelines.

Input cost inflation eased to a 14‑month low, while subcontractor rates rose at the slowest pace in about a year, reflecting softer demand and competitive pressures.

The S&P Global UK construction PMI fell to 40.1 in December, indicating ongoing contraction for the 12th consecutive month with a slower rate of decline.