Deconstructed: Q2 2026

Construction entered the second quarter of 2026 with the weakness of late 2025 and early 2026 still working through project pipelines. Total new orders had fallen by 10.5% in Q1, led by private commercial and infrastructure work, while revised national accounts later showed new work down by 2.1% across the quarter. The pattern was also evident at project level, where residential starts fell 13% and civil engineering starts fell 37% during the three months to March.

Although construction output rose by 0.1% in April, repair and maintenance supplied the entire increase, growing by 0.6% as new work fell by 0.3%. That distinction persisted through the quarter-end indicators: the S&P Global UK Construction PMI fell to 38.2 in May and recovered only marginally to 38.4 in June, while Glenigan estimated that the value of project starts declined by 15% during Q2 and remained 38% below the corresponding period of 2025. Official June output and Q2 new-order figures were still pending at the quarter’s close, but the available evidence pointed to continued weakness in the conversion of planned work into live construction.

By May, cost pressure had re-emerged with greater force after the broader moderation that followed the 2021–22 materials shock. The all-work construction material price index rose by 5.4% year on year and by 2.2% in a single month, with fabricated structural steel up 13.1%, aggregates up 12.2%, and bituminous mixtures up 11%. Cement and reinforcing bar prices remained lower than a year earlier, so the increase was concentrated rather than universal. April’s sharp rise in surveyed input-cost inflation had already shown fuel, shipping, and energy-intensive materials feeding back into tenders and procurement.

With starts contracting while selected inputs rose quickly, contractors and clients faced a narrower margin for error in cost plans, bid validity periods, and mobilisation assumptions. Competition for available work remained intense, but fixed prices prepared before the latest increases carried greater exposure, particularly where design information, approvals, or start dates remained unsettled. Housebuilding appraisals were under additional pressure from finance, regulation, and site-specific obligations; estimates that the cost of delivering a new home had risen by £76,000 since 2020 illustrated how cumulative burdens had built before Q2 began.

While market conditions weakened, the government continued the planning and infrastructure reforms already established during 2025. May’s proposals would allow Parliament to approve selected clean-energy schemes designated as projects of Critical National Importance, while other nationally significant infrastructure projects would receive a defined window for legal challenge. The measures followed the Planning and Infrastructure Act 2025 and its changes to National Policy Statements, pre-application procedures, and judicial review. Faster legal resolution could shorten one source of delay, although consenting reform cannot compensate for incomplete design, unresolved environmental evidence, unavailable grid connections, or construction packages that no longer meet investment criteria.

Although the higher-risk building regime continued to lengthen some pre-construction programmes, performance improved during Q2. The Building Safety Regulator recorded an 89% approval rate for new higher-risk buildings and conversions in the 12 weeks to 28 June, with a median approval period of 22 weeks and 6,544 residential units approved. External remediation applications reached an 85% approval rate, although their median remained 35 weeks as older cases were cleared. Earlier in the quarter, more than 12,000 homes had moved through Gateway 2, confirming gradual improvement rather than a sudden removal of the bottleneck.

Large programmes continued to provide a counterweight to the weaker general market, but both of the quarter’s most prominent examples had substantial histories before April. HS2 Ltd published revised cost and schedule ranges after the reset announced in June 2025, while the Universal resort in Bedfordshire had been agreed in April 2025 and received planning permission in December. Q2 brought firmer delivery parameters: HS2 obtained revised programme ranges and further changes to its operating model, while Universal secured a defined private investment commitment, public infrastructure funding, and early contractor mobilisation.

Repair, maintenance, remediation, utilities, energy, and major strategic projects continued to support workload, while private housing, commercial development, and parts of civil engineering struggled to convert demand into starts. Rather than opening a distinct new phase, Q2 extended a pattern established before April. The second half of 2026 will depend less on the nominal size of the pipeline than on whether costs, finance, consent, design maturity, and client confidence align closely enough for projects to move from approval into funded construction.

What were Q2 2026’s biggest building & construction stories?

Weak starts met renewed materials inflation

Construction activity weakened before Q2, but the quarter intensified the pressure on new work. Total new orders had fallen by 10.5% in Q1, and Glenigan’s quarter-end index then placed project starts 15% below the preceding three months and 38% below Q2 2025. The June construction PMI remained at 38.4, with civil engineering at 22.1 and housebuilding also in marked contraction. Alongside that demand weakness, the all-work material price index rose by 5.4% year on year in May, including a 6.9% increase for other new work. Repair and maintenance continued to support measured output, but fewer starts and faster price movement increased the risk carried between tender, contract award, and mobilisation.

HS2 reset produced revised programme ranges

HS2 Ltd entered Q2 with a programme reset already under way following the government’s June 2025 intervention. The May update set an estimated cost range of £87.7bn to £102.7bn, with services between Old Oak Common and Birmingham Curzon Street expected between May 2036 and October 2039. The full Euston-to-Handsacre scope was placed between May 2040 and December 2043. The ranges reflect a reassessment of remaining scope, commercial arrangements, organisational capability, and systems integration rather than a newly discovered single overrun. Construction continued in parallel: all 34 Northolt Tunnel cross passages were completed during April as the London works moved towards structural completion and rail-systems installation.

Infrastructure reform extended into judicial review

May’s judicial-review proposals continued the government’s established programme of planning reform. Selected clean-energy schemes could be designated as Critical National Importance and approved by Parliament, limiting subsequent challenges principally to human-rights grounds, while other nationally significant infrastructure projects would receive a fixed challenge window. The package also seeks to prevent arguments from being introduced during judicial review when they were not raised through the consenting process or formal challenge period. Ministers estimate that the reforms could remove up to six months from cases that progress through substantive hearings and appeals. Legislation and implementation will determine the eventual effect, particularly where faster procedure meets complex environmental, technical, and land requirements.

Gateway 2 approval rates improved

Gateway 2 performance improved through Q2 without returning higher-risk building approvals to pre-regime programme assumptions. New buildings and conversions recorded a rolling 12-week approval rate of 89%, with 33 approvals, four rejections, and a median approval period of 22 weeks. External remediation reached 85%, but the 35-week median reflected older applications still being cleared. Internal refurbishment work recorded a 73% approval rate and a 28-week median, while 1,505 Gateway 2 applications remained in progress across all categories at the quarter’s end. Complete, coordinated submissions therefore remained central to mobilisation, alongside the approaching Building Safety Levy deadline for affected residential schemes entering technical design and building control.

Universal resort gained firmer delivery commitments

Universal Destinations & Experiences advanced its Bedfordshire resort from an approved development towards a defined construction programme. Comcast NBCUniversal committed more than £5bn over an expected five-year build, while the government confirmed £1.3bn for regional and local infrastructure, including transport and community works. The resort had been agreed in April 2025 and granted planning permission in December, so Q2’s development lay in funding detail, enabling activity, and contractor mobilisation. By late June, major contractors were assembling around early delivery packages covering buildings, civils, groundworks, utilities, logistics, and public realm across the former brickworks site, ahead of a planned 2031 opening.

IN answer to…

Did Q2 2026 begin a new UK construction downturn?

No. Construction had weakened through late 2025, while Q1 2026 brought a 10.5% quarterly fall in new orders and a 2.1% decline in new work. Q2 prolonged that pattern, with project-start and PMI data showing further contraction. Complete official Q2 output and new-order figures were not yet available at the end of the period, so the evidence supports continuation and intensification rather than a precisely dated new downturn.

How quickly were construction material prices rising?

The all-work material price index rose by 5.4% in the year to May 2026 and by 2.2% between April and May. Other new work recorded annual inflation of 6.9%. The movement varied sharply by product: fabricated structural steel, aggregates, and bituminous mixtures increased by double-digit percentages, while cement and reinforcing bar prices were lower than a year earlier.

Were Gateway 2 approvals becoming faster?

Approval rates improved during Q2, although median periods remained substantial. New higher-risk buildings and conversions reached an 89% approval rate with a 22-week median, while external remediation reached 85% with a 35-week median. Some newer applications were approved more quickly, but older and complex cases continued to influence the overall figures.

What changed for HS2 and the Universal resort during Q2?

HS2 received revised cost and schedule ranges following the reset announced in June 2025, while physical construction continued across the route. Universal’s Bedfordshire resort had already been agreed and consented, but Q2 added a defined £5bn-plus private construction commitment, £1.3bn of supporting public infrastructure, and clearer contractor mobilisation. Both developments advanced established programmes rather than introducing wholly new projects.