UK Construction Sector Sees Sharpest Fall in Activity Since 2020
The UK construction sector has suffered its sharpest fall in activity since May 2020, according to a closely watched survey. The survey, conducted by S&P Global, found sharp declines in all three subsectors: civil engineering, residential construction, and commercial construction.
Decline in Housebuilding Activity
Housebuilding activity was at its weakest level since the first lockdown during the COVID pandemic. The report also noted that new orders and employment have declined sharply. This decline is of particular interest to ministers, who are working towards delivering 1.5 million new homes across England by the end of Parliament.
Impact on the Economy
The report suggests that the government’s messaging on public finances has damaged the economy since it took office. Inflation and the unemployment rate have risen, and business groups and economists have blamed the government’s policies for the slowdown. The unemployment rate in the United Kingdom was 4.1% when Labor took office, but it is currently at 5%.
Business Surveys Show Similar Concerns
Other recent business surveys have also shown similar concerns about investment, hiring, and demand. The S&P Global’s activity gauge in services, manufacturing, and construction suggested near-zero growth. This will add to claims that the government’s policies have damaged the economy.
Criticism from Economists and Industry Figures
Former Chief Economist at the Bank of England, Andy Haldane, said that repeated mistakes had robbed all life from the trust of companies and consumers. Industry figures, such as Frasers Group, have also voiced their disapproval, saying that budget preparation had been incredibly annoying as shoppers’ willingness to buy had been very subdued.
Automotive Industry Affected
The automotive industry’s new car sales figures for November blamed the budget increase for slowing demand. The Society for Motor Manufacturers and Traders said speculation about impending tax rises had proved a drag as sales fell almost 2%.
Skepticism About the Link Between Budget and Construction Decline
The prestigious EY ITEM Club said a link between budget and the decline in construction production should be viewed with a healthy degree of skepticism. The chief economic adviser, Matt Swannell, said that the PMI had been much more pessimistic than official estimates of construction sector activity, and that the weakening construction PMI remained in contractionary territory throughout 2025.
