UK Construction Faces Deepest Slump Since Financial Crisis
Worst Run in Nearly Two Decades
Britain’s construction sector has entered its most prolonged downturn since the global financial crash of 2007‑09. Output shrank for the 12th consecutive month in December 2025, marking the longest unbroken run of declines in almost 20 years. The slump has been particularly severe in housebuilding, which is experiencing its deepest contraction since the Covid‑19 lockdowns of 2020.
PMI Survey Findings
The Purchasing Managers’ Index (PMI) compiled by S&P Global and CIPS recorded a headline reading of 40.1 in December, close to November’s five‑and‑a‑half‑year low of 39.4. Any score below 50 signals contraction. Economists had expected a modest improvement to 42.5, but the data underscored persistent weakness.
Tim Moore, economics director at S&P Global Market Intelligence, noted that while workloads continued to fall, the pace of decline moderated compared to November. He highlighted subdued demand, fragile client confidence, and delayed spending decisions as key factors weighing on the sector.
Housebuilding Collapse
The housebuilding subindex dropped to 33.5, its lowest since May 2020 when construction sites were shut during the nationwide Covid lockdown. The decline raises doubts about the government’s ability to meet Labour’s pledge to build 1.5 million new homes in England over five years. Industry leaders have already warned that the target is unlikely to be achieved.
Commercial and Civil Engineering Trends
Commercial construction also contracted sharply, with output falling at the fastest pace in more than five years, reflected in an index reading of 42. Civil engineering showed a slight easing in its downturn but remained the weakest subsector, with a reading of 32.9.
Outlook
Despite the grim data, some firms expressed cautious optimism, citing reduced budget uncertainty. However, the sector remains under pressure, with recovery dependent on stronger demand, improved confidence, and accelerated government housing initiatives.