Slow growth, clear opportunities

The economic outlook for UK construction may be subdued, but there are reasons for cautious optimism according to Noble Francis, economics director at the Construction Products Association (CPA), speaking at the Council for Aluminium in Building’s (CAB) 31st Annual General Meeting.

As one of the most respected voices in UK construction economics, Noble is said to have delivered ‘a detailed and data-rich’ assessment of the market, offering CAB members a grounded but forward-looking view of what lies ahead for 2026 and beyond.

According to Noble, the UK economy continues to “bumble along”, with GDP forecast to rise by 1.3% in 2025 and 1.5% in 2026 – below the long-term trend of 2% growth.

“We’re seeing some recovery, but it’s hesitant,” he noted, citing the upcoming Autumn Budget and uncertainty around who will shoulder forthcoming tax rises as a major drag on confidence.

“Whether those costs fall on businesses or households, they will have a ripple effect,” he said. “If it’s businesses, we’ll see lower investment; if it’s households, that will hit consumption, and consumption drives our economy.”

He also highlighted rising unemployment, partly the result of the April increases in the National Living Wage and employers’ NICs, which have prompted many companies to freeze non-essential recruitment.

Weak housing, stronger niches

CPA forecasts show total construction output up 4% in 2025, followed by 2.8% in 2026, suggesting moderate but broad-based growth. However, Noble cautioned that this growth will not be evenly distributed.

• Private housing remains the sector’s biggest challenge. Completions fell by around 20% between 2022 and 2024, and while a modest uptick is expected in 2026, affordability issues and building safety regulation delays are slowing recovery. Developers are finding it increasingly hard to justify new high-rise projects, particularly in London.
• Commercial refurbishment and fit-out offer a contrasting picture of strength. “If you’re working with the Overburys of this world, there’s good margin work in high-quality office refurbs,” Noble said. “But large-scale new builds remain difficult to finance, especially with 70% of existing office space below the minimum EPC ‘B’ threshold required for letting after 2030.”
• Public non-housing activity, particularly in schools, defence, and prisons, is poised for gradual expansion, underpinned by long-term government programmes such as the School Rebuilding Programme and the New Hospital Programme.
• Infrastructure, driven by energy generation and distribution, is a major bright spot. “The National Grid’s capacity upgrades and the growth of renewable energy projects will keep this area buoyant,” Noble said. “Water investment under AMP8 is also expected to pick up significantly in 2026.”

Opportunities

Despite the subdued overall forecast, Noble emphasised that “there are real opportunities for those positioned in the right markets.”

He pointed to data centres, biotech and private healthcare, and energy infrastructure as sectors with multi-year growth potential.

“These are long-term trends driven by technology, sustainability and population change, not short-term economic cycles,” he explained.

However, he warned that the Building Safety Regulator’s 6–9 month project delays and rising compliance costs, from the Future Homes Standard to the Building Safety Levy, will continue to challenge developers and suppliers alike.

Skills and supply chain resilience

Long-term, Noble identified the industry’s skills shortage as a major constraint. “Even if we achieve only half of the Government’s targets for 1.5 million new homes and £725 billion of infrastructure, we simply don’t have the workforce to deliver it,” he said.

The ageing profile of skilled trades and insufficient recruitment remain structural risks to sustainable growth.

A cautiously optimistic outlook

Summing up, Noble described 2026 as a “year of stability and transition,” with modest gains across most major sectors.

“Next year won’t bring dramatic recovery,” he said, “but it will bring momentum. For those in refurbishment, retrofit, or energy-related work, the prospects are particularly strong.”

CAB chief executive, Nigel Headford, commented that the forecast underscores why collaboration across the aluminium and construction sectors is more critical than ever.

“In a market defined by uncertainty, knowledge and adaptability are everything,” he said. “Noble’s analysis gives our members the clarity they need to plan ahead and identify where the real growth opportunities lie.”