UK construction growth could be delayed because of the fallout from US tariff hikes, an industry body has warned.
The Construction Products Association (CPA) said big private sector projects could stutter while investors wait to gauge the outcome and impact of global import duty hikes.
In its 2025 Spring Forecast, released this morning (28 April), the CPA predicted a 1.9 per cent rise in UK construction output this year followed by a 3.7 per cent increase in 2026.
This is down from 2 per cent and 4 per cent respectively in its previous forecast, but the body warned this excluded the impact of tariffs, which it said presented “a big risk” to the sector’s recovery.
US president Donald Trump slapped import tariffs of between 10 and 145 per cent on countries around the world earlier this month, although he has since paused the introduction of many of these to allow talks to take place.
Meanwhile, other nations such as Canada and China have raised duties on the US in retaliation. And the International Monetary Fund has slashed its expectations of economic growth in the UK this year, partly as a result of the global uncertainty sparked by the tariffs.
The CPA said: “The higher current uncertainty is likely to mean that if contractors are not sourcing locally made products, there will be more risk and volatility in prices, which may be an issue for firms on fixed-price contracts signed up to 12-24 months ago, when these risks wouldn’t have been factored into bids.
“Greater uncertainty also means a higher risk of incurring higher costs for new projects. This particularly affects larger projects, which are large upfront investments for a long-term rate of return and where the uncertainty not only affects project costs but also investor confidence.
“As a result, the largest impacts could potentially mean a delay or hiatus in contract awards and tenders for new, large commercial, industrial and build-to-rent developments, in addition to private investment in infrastructure.”
CPA head of construction research Rebecca Larkin said: “After a difficult couple of years, the fundamentals still point towards a return to growth in construction activity in 2025 and 2026.
“A gradual improvement in UK economic activity and the government’s commitment to capital expenditure should boost demand, while easing of planning for housebuilding, infrastructure, data centres, gigafactories, schools, hospitals and prisons should also help delivery in the medium-term.”
But she added: “The big risk is the potential impacts of the US tariff disruptions in April.”
While three-quarters of construction products used in the UK are sourced domestically, and two-thirds of imports required are from the EU, the problem is likely to come from the wider economic mood and uncertainty, she said.
Almost four-fifths of the rise in construction output expected this year is from private cash, explained Larkin.
“UK construction is pro-cyclical, meaning construction activity moves in line with the UK economy. Nevertheless, construction activity is also three times more volatile than the UK economy so it would not take a significant hit to global and UK economic growth for construction growth to be badly affected over the next 12-18 months.”
Private housing is expected to lead the charge this year, with a 4 per cent increase in output this year, according to the CPA’s latest forecasts. Public sector non-housing work is predicted to see the next most growth at 2.2 per cent.
Only new-build commercial projects are expected to see a dip in value in 2025, and then only of 0.2 per cent.
The private housing sector is forecast to soar by 7 per cent in 2026, with social housing next at 5 per cent.