UK construction output is forecast to contract by 2.5% in 2026, with the private housing repair, maintenance and improvement (RM&I) sector expected to see the sharpest decline, according to the Construction Products Association (CPA).
The updated spring forecast, published this week, attributes the revised outlook to rising material and energy costs and weakening demand, with wider economic pressure linked to instability in global energy markets.
The CPA also forecasts an 8% fall in repair and maintenance activity this year, marking a significant downgrade on previous expectations.
Repair and Maintenance Sector Faces Sharpest Decline
The Federation of Master Builders (FMB) said the figures confirm ongoing concerns among small builders about rising costs and reduced workloads, particularly among SMEs heavily exposed to domestic repair and refurbishment projects.
Brian Berry, Chief Executive of the Federation of Master Builders, said: “Since the situation in Iran our members have been sharing their concerns about the impact on material costs and oil prices – combined with the threat of work potentially drying up.
“This CPA forecast of an 8% fall in repair and maintenance work will hit small, local firms like our members the hardest. Economic turbulence makes consumer protection more important than ever.
“Furthermore, our research proves homeowners are being put off doing building work due to a lack of trust in the industry, a mandatory licensing system would give homeowners confidence to hire trustworthy and legitimate builders – which is what the sector desperately needs right now”
Consumer Confidence and Trust Cited as Demand Barrier
The HomeOwners Alliance said weaker consumer confidence is also contributing to reduced activity in the domestic construction and home improvement market.
Paula Higgins, CEO of the HomeOwners Alliance added: “When confidence in the economy drops and prices continue to rise, homeowners pause spending.
“The government can help counter that by restoring trust and making it easier to find reliable builders through licensing.
That would be good for the economy, support the construction sector and help homeowners maintain safe, comfortable homes, knowing they won’t be ripped off by rogue traders.”
Energy Costs and Geopolitical Pressures Driving Forecast Downgrade
The CPA said its forecast has been downgraded significantly from winter projections, citing rising oil and energy costs linked to geopolitical tensions as a key factor behind expected price inflation and reduced confidence in household spending decisions.
The trade body warned of sharp increases in input costs in the second half of 2026, alongside weaker sentiment among consumers considering discretionary home improvement projects.
Wider Industry Concerns Over Global Construction Outlook
Separate industry research also suggests broader concern across the construction sector, with nearly seven in ten UK construction firms reporting expectations of “severe” impacts from ongoing geopolitical instability over the next six months.
