Introduction
Welcome to the Q1 2026 edition of Construction Market Intelligence, RLB’s insightful, up-to-date guide to construction activity around the UK incorporating our quarterly tender price forecast.
The RLB Weighted Average Tender Price Index forecast uplift for 2026, as at Q1 2026, is:
3.45%
Previous quarter’s forecast for 2026: 3.27%
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Construction sector’s cautious optimism reflects positive but fragile economic indicators
By statistical accounts, 2025 saw a year of growth for the UK construction industry. Data published by the Office for National Statistics (ONS) reveals that new orders for construction were up 12.6% on 2024. At face value, this headline paints a positive picture, but it doesn’t tell the whole story.
ONS data for construction output highlights slow growth over the year, with new work and repairs and maintenance (R&M) work both recording a stifled annual growth of 1.79% and 1.75% respectively. The top-performing sector in construction output, according to the ONS, was ‘public other new work’ (ie not housing, infrastructure or R&M) which was up around 18% over the year. Most other sectors were stagnant. For example, ‘public new housing’ was down almost 7%, a statistic that the government will be looking to turn around over 2026 to meet its ambitious housing target for this parliament.
The feeling described by many is one of cautious optimism. Growth may be weak and unemployment up, but inflation appears near under control and the downward trajectory on interest rates expected to continue. On the ground, it appears that there is a renewed desire to get projects moving in 2026, with many cities having shovel-ready commercial, residential and regeneration projects itching to start when viability allows.
Input costs continue to rise, higher than tender price indices, driven by a range of increases over the year, including to National Insurance, National Minimum Wage and National Living Wage. According to the Office for Budget Responsibility (OBR), wages and salaries are expected to steady out, which will give some sort of reassurance to businesses who have struggled with labour costs over the last few years, and perhaps ease concerns of margin compression in the longer term.
Taking an optimistic view, the pipeline is there. Despite viability concerns, teams are increasingly determined to get projects to stack up given the relatively stable, if fragile, economic metrics.
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Middle East Update
As this edition of Construction Market Intelligence went to press, the unfolding conflict in the Middle East became the latest in a series of international events with the potential to disrupt the UK construction sector.
Read our analysis of how tender prices and procurement could be impacted.