Ed Griffiths, Head of Business and Client Analytics at Barbour ABI, provided a valuable analysis of the health of UK’s construction at the 2025 UK Timber Design Conference. In this article, we share the important headlines from his extremely valuable presentation.
Barbour ABI is the UK market leader in provision of construction intelligence. It tracks all planning applications as they come in, analysing them and supplementing them with further detailed research, to provide a clear understanding about the current and future status of UK construction.
UK construction in 2025: the big picture
The overall forecast for the UK economy across 2025 is a 1.1% increase in GDP (gross domestic project). Q1 of 2025 saw growth of less than that – 0.7% – which could be ascribed to a number of factors such as trading disruption due to tariff impositions and international wars. If the UK does achieve growth of 1.1%, that will place it among the best-performing G7 Countries.
Consumer confidence (as measured by the GfK index) improved by three points in May 2025, but to a figure of -20, which is still very low. “Quality of life is something that everybody feels has taken a hit,” Ed stated. “Everyone’s pockets feel a little bit lighter than they would like at the moment, which detracts from consumer confidence.”
Unemployment was at 4.5% in March 2025 – its highest since 2021. There are about 100,000 more unemployed year-on-year, with youth unemployment being one of the concerning areas in which it is increasing.
Ed Griffiths of Barbour ABI, addressing the UK Timber Design Conference in July 2025
Inflation had increased by 2.6% year on year as of March 2025. Base interest rates have been reduced to 4.25% in May 2025. “They are continuing to come down and could see that get as low as 3.75% by the end of the year,” Ed suggested. “If so, that could stimulate more borrowing and speculation in construction.”
“Foreign investment in the UK is expected to grow by 2.3% – which might not sound dramatic, but that amounts to billions of pounds,” he continued. “This may, however, be negatively impacted by rising inflation.”
Challenges facing construction delivery
“There has been a 14.3% decline in the number of people that are employed in the total construction industry since 2019 – around 350,000 fewer people,” Ed explained. An ageing workforce is problematic, with those retiring not being replaced. On average, there are around 31,000 new apprentices in the construction industry in any given year, but there’s a dropout rate of 40%.
Ed also mentioned the problem of what he termed “regulatory bloat”, citing the example of the Lower Thames crossing. “This has cost billions of pounds so far, and over £250 million has been on the application part. For context, the world’s longest road tunnel – in Laerdal, Norway – was planned and built for less than £250 million. In the UK, we need to jump through a lot of hoops to get significant things done.”
Planning applications in numbers
Barbour tracks all planning applications in the UK that are worth over £100,000. From a volume perspective, it was down 9% in 2024; and from a value perspective, it was down 5%. “What that tells me is that the large projects are still happening, but smaller projects are unfortunately taking the hit,” Ed concluded. London is slightly more resilient than the rest of the UK, down only 3%; with the north-west declining the most, by 13.8%.
© Barbour ABI
The residential sector accounted for the majority of planning applications in 2024 by some margin; however, the number had dropped by 7.7% compared to the previous year. Planning application numbers declined in all sector apart from infrastructure (up 10.3%), commercial and retail (up 5%) and hotel, leisure and sport (up 1%).
© Barbour ABI
New work commencing in the next four years anticipates growth of £45.5 billion from infrastructure, partly due to the net zero drive’s need to upgrade the grid and build new data centres. The residential sector is anticipated to account for £13.1 billion.
A closer look at resi
Within the residential sector, private developments and flats make up the vast majority of applications; accordingly, it accounts for the most decline. Ed pointed out the backlog affecting the residential sector: many homes haven’t been built yet on sites that have already been applied for and approved.
And many of the housebuilders that have reported their completions being up are also listing their profit as being down; indicative of the materials cost increases affecting house building over the last three years. Regulatory pressures will also have affected housebuilders, such as navigating the Building Safety Act’s gateways, which carries inherent costs. In the first four months of 2025, residential applications are down 14% year-on-year.
“The number of units in an average application has come down,” Ed explains. “If the applications made in 2024 had been made in 2015, we would have built 75,000 more homes. In other words, even if the number of applications hadn’t declined in recent years, we still wouldn’t be achieving the same number of homes. All of which underscores a difficult climate for housebuilders.”
Light at the end of the tunnel?
In summary, there are clearly several macro and micro factors impacting UK construction. “All of this might sound quite bleak, but much of it is better than it was 18 months ago,” Ed suggests. “The outlook for house building is positive: construction is quite cyclical, and I would anticipate seeing growth coming towards the end of 2025 and into 2026.”
Read further insights from the 2025 UK Timber Design Conference: Why the UK Must Embrace Timber Construction to meet Climate and Housing Goals
