Glenigan, the construction data analyst, is predicting strong growth in construction during the next two years.

Its UK Construction Industry Forecast 2024-2026 says construction project starts will continue to strengthen as UK economic growth gathers momentum.

The report forecasts an 8% increase in construction growth in 2025 and 10% growth in 2026 as the prospect of recovering market certainty lifts consumer and business confidence, boosting the industry.

Glenigan says civil engineering project-starts have rebounded strongly this year - up 26% - after a 6% decline in 2023.

Underlying work (projects valued <£100m) has influenced this figure, despite the cancellation of several major infrastructure projects.

It says recovery is forecast for 2025 and 2026. Projects starts have stabilisted since the election and private sector work levels have gradually risen.

Although Glenigan predicts only a modest 1% performance dip for 2024 by the year’s end, comparatively it’s a large improvement against the 7% drop in 2023.

Firm development pipelines are also pulling through, with main contract awards standing 7% up on 2023 figures, supporting a renewed rise in industrial and office starts as investor confidence improves.

Civil engineering is expected to grow steadily over the forecast period, driven by utilities projects.

Utility starts are likely to strengthen in 2025 as water companies begin implementing their investment programs.

The expansion of fibre-optic broadband across the UK will also contribute to sector growth.

Water companies have proposed doubling capital investment to £96bn for AMP8, the next five-year control period, which includes projects such as new reservoirs and river quality improvements.

While the regulator may scale back some plans, it says a substantial increase in water industry investment is expected.

Energy investment is also set to grow, with a focus on renewable energy and grid enhancements to support net zero goals.

This includes both major projects, like offshore wind farms, and smaller developments, such as onshore wind and solar PV projects.

It adds the green light for the HS2 rail tunnel to Euston and the government’s commitment to key rail projects like the TransPennine route upgrade and East-West rail link will further support long-term sector activity.

Glenigan says the upcoming Spending Review will provide clarity on the funding and timeline for these projects.

It is forecasting a 5% rise in sector activity in 2025, and a further 7% in 2026.

Glenigan’s economic director Allan Wilen said:  “The construction sector is on track for growth from 2025.

“The recent Budget's adjustments to fiscal rules, allowing for higher levels of capital investment, will also unlock significant public sector and infrastructure projects, providing a much-needed boost to government-funded initiatives over the next two years."