UK Infrastructure to Drive 14% Construction Surge by 2031

UK infrastructure work will grow 14% between 2026 and 2031, making it the standout performer in a construction market otherwise heading for only modest growth, according to consultancy McBains.

The firm's latest forecasts predict construction output rising 1.8% in 2027, strengthening to 2.8% in 2028, then moderating to 2.3% in 2029 and 2.1% in 2030. That's roughly two percentage points a year — steady, but nowhere near a boom. Residential and commercial development, by contrast, will see what McBains calls a more selective recovery.

Colin McCaffrey, director at McBains and leader of the team behind the report, said: "The UK construction market is entering a more stable period beyond the disruption experienced between 2020 and 2023, but it is far from business as usual."

What's holding the market back?

McCaffrey points to a familiar list of pressures. "Competitive tendering is helping to constrain price growth, but the industry is still operating against a backdrop of elevated energy costs, labour shortages and persistent pressure on materials, affecting project viability and delivery," he said.

Steel sits at the top of the near-term risk list. "Steel is one of the biggest near-term cost risks. We have seen prices rising sharply this year, with tighter import controls, the incoming Carbon Border Adjustment Mechanism, and volatility in energy costs making it harder for contractors to price with confidence. In this environment, a delay in procurement can have a direct impact on the bottom line," McCaffrey said.

The mechanism matters here: when contractors can't fix prices, every month of procurement delay widens their exposure to inflation. That's why timing, not just budget, now decides whether a project pencils out.

Which sectors win and which lag?

The divide between sectors is pronounced, McCaffrey said. Infrastructure, defence and healthcare all benefit from significant planned investment. Residential does not.

"Due to affordability, material costs and regulation, residential remains constrained," he said. "Looking ahead, we expect a gradual recovery rather than a rapid rebound."

Over the next five years, McBains expects four areas to offer the most important opportunities for contractors:

• Infrastructure
• Defence
• Healthcare
• Data centres

The firm also flags growing demand for retrofit work, as building owners push to improve energy performance under sustainability pressure and to protect long-term asset value.

What separates successful projects from stalled ones?

McCaffrey is blunt about the delivery question. "Projects that are well funded, properly planned and supported by a robust delivery strategy will be best placed to navigate the uncertainty facing the industry," he said.

"With programme delays increasing exposure to inflation, supply chain risks and market repricing, it is essential to get design approvals, procurement and delivery milestones right."

For contractors and clients, the forecast implies a clear sorting: public-infrastructure work tied to committed investment offers the most dependable pipeline, while anything dependent on housing demand or volatile steel pricing carries a thinner margin for error. Firms that lock procurement early and hit delivery milestones will be the ones that keep the recovery's gains rather than paying for its delays.