IN Brief:
- Project starts fell 8% against both the preceding quarter and 2025.
- Main contract awards dropped by more than two-fifths quarter on quarter.
- Detailed planning approvals rose 13%, although remaining 20% below last year.
Glenigan has recorded an 8% fall in UK construction project starts during the three months to the end of June, with the same decline measured against the equivalent period of 2025.
Main contract awards fell by more than two-fifths against the preceding three months and finished 6% below the previous year. Detailed planning approvals provided the principal area of growth, rising 13% quarter on quarter, although their value remained 20% lower than a year earlier.
The July Construction Review covers major projects valued above £100m and an underlying market of schemes below £100m, with the underlying figures seasonally adjusted. The data shows a market entering the second half of 2026 with a larger planning pipeline but fewer projects reaching contract and construction stages.
Residential construction was among the weakest areas. Starts fell 34% year on year and detailed approvals reduced by 16%, although a 16% increase in main contract awards provided some support for larger schemes already moving through procurement.
Social housing represented the strongest part of residential activity, while private housing and apartment construction remained constrained by mortgage costs, buyer confidence, development finance, and scheme viability. London accounted for £2.5bn of residential starts, and the East of England led planning approvals with 92% annual growth.
Private non-residential activity was uneven. Industrial starts fell 37% and contract awards declined by 63%, but detailed approvals rose 22%; office starts reduced by 11% and awards by 56%, while approvals more than doubled with growth of 107%.
Retail starts fell 9%, and hotel and leisure construction dropped 47%. Hotel and leisure approvals nevertheless increased by 125%, continuing the wider pattern of projects advancing through planning without immediately converting into contract commitments.
Civil engineering carries current workload
Infrastructure produced the strongest performance, with civil engineering starts rising 73% year on year and main contract awards increasing 16%. Roads accounted for much of the activity, while harbour and port schemes also supported the total.
The South East represented £6.2bn of starts following growth of 201%, with the West Midlands and East of England also recording substantial increases. The civil engineering planning pipeline was weaker, however, as detailed approvals fell 57%, indicating strong current delivery but a thinner flow of replacement work further ahead.
Education was the strongest public-building sector, with starts rising 2%, awards increasing 25%, and approvals up 9%. Government commitments to the Schools Rebuilding Programme provide forward visibility, although individual schemes must still pass through design, procurement, funding, and approvals.
Health starts fell 5% and awards declined 26%, while approvals rose 74%. Community and amenity work performed substantially worse, with starts down 75% and awards falling 64%; military and blue-light projects provided isolated areas of growth.
Allan Wilen, economics director at Glenigan, said: “The outlook remains delicately balanced. Yes, a bounce in planning approvals points to underlying demand, but weaker awards and starts highlight ongoing challenges around viability, financing, and funding. A raft of different factors, including interest-rate movements, construction-cost inflation, and government infrastructure investment, will be critical in determining whether the stronger pipeline translates into sustainable growth in project activity.”
The figures continue trends visible across construction activity during the second quarter, when planning policy and long-term investment programmes supported potential workload but immediate decisions remained constrained by finance and delivery risk.
A planning approval is only an early stage within the construction cycle. Developers must still discharge conditions, secure finance, agree utility connections, complete technical design, appoint contractors, and confirm that projected income can support current build costs.
The sharp fall in contract awards is consequently more concerning than the improvement in approvals. Awards sit closer to site activity and provide a stronger indication that clients are prepared to commit commercially, while a weak award period can reduce starts several months later.
Contractors face a difficult balance in this environment. Competition for immediately available work can place pressure on margins, while retaining staff and supply-chain capacity remains essential if activity strengthens during 2027.
Selective bidding, robust risk pricing, and clear payment terms will therefore carry greater weight than headline order-book volume. The consequences of underpriced work become more severe when programmes move, packages are delayed, or costs increase between tender and mobilisation.
The government’s long-term infrastructure pipeline provides a foundation across civil engineering, energy, transport, education, and public assets. Near-term activity will still depend on how quickly those commitments become funded procurements and signed contracts.
Q2 closed with more schemes seeking a route through planning, but fewer clients prepared to place the commercial commitments required to begin construction.
