New data from consultancy Arcadis shows a “cautiously optimistic” outlook for the construction industry, despite global economic uncertainty.

Plus, government interventions on planning reform and funding for transportation and housing is improving the long-term outlook for the sector.

The comments come as global design and consultancy firm Arcadis published its Summer 2025 UK Construction Market View Report.

The analysis provides key insights into the current economic conditions, sector performances and future projections for the UK construction market, overlaid with challenges and opportunities provided by the Comprehensive Spending Review (CSR).

Despite challenging economic conditions, and continuing global uncertainty, Arcadis’ analysis shows several key sectors are beginning to scale up – with projections showing the construction industry growing faster than the wider economy.

While sticky inflation may slow the rate of interest rate cuts, there are early, tentative signs of recovery – says Arcadis.

Orders have regained some lost momentum and industry sentiment is improving.

Key highlights from this analysis includes:

• Continuing recovery in workload - new build construction workload increased marginally in Q1 2025 and the outlook is stabilising.
• Improved contractor performance - analysis of recent trading updates suggests that many contractors have fared better in 2024 than in the previous year, putting them in a stronger position for when the markets do eventually turn.
• Places sector - health, education, prisons and housing are all big winners from a pivot to social infrastructure in the CSR.  Innovative 10-year settlements will give contractors the confidence to invest.
• Resilience sector - water companies are scaling up efforts to meet their AMP8 commitments, but programmes are taking time to get started. This will likely lead to workload being delivered in a shorter period.
• Mobility sector - the government will continue to make critical investments in roadways, bridges and key megaprojects, providing long term certainty. Cities have done particularly well: Transport for City Regions settlements total £15.6bn by 2031/32, representing a real-terms doubling in city-focused transport investment.
• Procurement trends - an emerging trend towards single-stage procurement for larger new-build projects is creating opportunities outside of higher risk buildings (HRBs). This model is particularly suited to Tier 2 contractors and is gaining traction in commercial markets outside of London.
• Tender price inflation and forecast - TPI forecasts remain unchanged as clients and contractors wait for stronger signs of recovery.

Simon Rawlinson, Arcadis’ head of strategic research and insight, said: “While economic headwinds persist, the construction industry maintains cautious optimism for the future, thanks in part to new government investment and support.

“Our latest analysis underscores the importance of strategic focus and sustained investment. The positive momentum in key sectors such as network infrastructure, together with spending review surety in the public sector, provides a foundation for potential sustained growth."

Click here to read the full 2025 UK Construction Market View report.