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Report from
Europe
UK construction in slow recovery, but with downside
risks
The UK Construction Products Association (CPA), a
leading commentator on the state of building in the
country, has revised down its forecast for industry growth
in 2025 due to a range of adverse factors. It also says
global economic uncertainty caused by the threat of US
import tariffs could may have a further depressing effect
on market sentiment and consequently curb construction
investment.
In its Winter Forecast it predicted that UK construction
output would increase 2% this year and 4% next. In its
just-published Spring Forecast it has downgraded this to
growth of 1.9% this year and 3.7% next. It says that this
results from a weakening in UK economic growth
prospects overall and a ‘slow and erratic start’ to
construction activity at the start of this year, with poor
weather holding up work on sites.
March and April saw some improvement, but wider
economic uncertainty is affecting the sector’s outlook.
The lack of UK economic growth was already a concern
for the sector, with GDP rising only 0.4% in 2023 and
1.1% in 2024. Now forecasts for 2025 have been revised
down to growth of just 1%. Moreover, inflation is
predicted to be higher for longer than previously expected.
On the upside for the economy, says the CPA, is the
persistent real wage growth the UK over the last giving
consumers more investment and spending power.
Another encouraging sign that construction has reached or
passed the lowest point in its downturn is the declining
number of company insolvencies in the sector.
In the year to January 2025 4,031 building businesses
closed down. That was on a level with the year to
December 2024, but 8.4% lower than the figure for 2023.
The state of the market is still resulting in some big
closures, however, with the UK’s sixth largest contractor
ISG going into administration in September 2024. The
company employed 2,200 people and had £4.3 billion of
outstanding contracts around the country. This is expected
have a major impact on a large number of the firm’s sub-
contractors.
The CPA predicts that house building, the largest element
of UK construction will recover only gradually after its
contraction in 2024. Last year only 217,911 houses were
built in the UK, a fall of 13,089, or 5.6%, on 2023 when
housebuilding contracted 9%. The 2024 figure was the
lowest level of housing newbuild since 2017.
Despite concerns over homebuyer confidence, however,
the CPA forecasts that private housing output will grow
4% in 2025 to £39.4 billion, with completions rising to
143,731. It then predicts 7% output growth in 2026 and
6% in 2027, with completions up to 152,355 and 159,973
respectively. Underpinning a more positive outlook for
the sector are signs that the property market is improving,
with property transactions in February 2025 28.1% higher
than in the same month of 2024. UK mortgage approvals
for the month were also 8.2% up compared to February
2024.
At the same time there are downside risks, says the CPA.
Adverse factors affecting the private house building sector
include continued rises in costs. The new Future Homes
Standard stipulates that builders will have to raise housing
energy performance. They also face regulations to ensure
water and nutrient neutrality for construction sites which
are also driving up overheads, and as of April they have
had to pay higher National Insurance Contributions and a
higher National Living Wage.
However, with interest rates cut to 4.25% in May and the
Bank of England hinting of more reductions in coming
months, consumers are likely to have more finance
available for home improvement work. In particular they
are expected to spend on energy-efficiency retrofit, which
includes installation of higher performance doors and
windows, so potentially boosting the timber joinery sector.
New build public housing output in the UK contracted by
7.1% to £5.7 billion in 2024, with just 44,032 new homes
completed and the CPA says the sector continues to face
headwinds.
These include a diversion of housing association funds to
remedial work on existing housing stock to meet new
building safety rules and improve energy performance. As
in the private housing sector, the Building Safety Act is
also holding up starts and completions of high-rise
residential building.
However in its autumn budget the government allocated
an additional £500 million to the Affordable Homes
Programme (AHP) with the aim to build an extra 5,000
public sector homes. In February a further £350 million of
government funding was injected for another 2,800
properties.
Significant funds are being spent on replacing cladding on
high rise social housing to meet the new fire safety
regulations imposed after the Grenfell fire disaster.
But more money is also being allocated to improving
housing energy performance as part of efforts to
decarbonise housing construction – and in November 2024
the government put a further £1.29 billion into the Warm
Homes: Social Housing Fund it’s largest allocation to date.
“Despite a continued stream of activity from the
refurbishment, fit-out and repurposing of existing
commercial buildings, as well as niche areas of growth
such as data centres and life sciences, commercial output
is only expected to return to growth in 2026 as large new
build office towers move into the construction phase,”
says the CPA.
After contracting by 9.3% in 2024, infrastructure
construction output is expected to grow 1.8% in 2025
£30.3 billion, with further rises of 4.5%, 3.35 anticipated
in 2026 and 2027.
Potential US tariffs impact on UK construction
In a special note, titled Economic and Construction
Impacts of US Tariff Disruption CPA says the potential
effect of US tariffs on UK construction is very uncertain,
with the tariff structure, which countries will be affected
by the tariff strategy and for how long remains unclear.
Individual deals made by the US with particular countries,
including the UK, and trading blocks following the first
announcement of tariffs, says the CPA, makes predictions
still more difficult.
See:
https://www.constructionproducts.org.uk/news-media-
events/news/2025/april/press-release-cpa-releases-spring-
forecasts-2025/ - :~:text=“The CPA is forecasting
construction,line with the UK economy.
https://www.constructionproducts.org.uk/publications/economics
/construction-industry-forecasts/construction-industry-forecasts-
spring-2025/
https://www.constructionproducts.org.uk/publications/economics
/research-papers/impacts-of-us-tariffs/
Guide explains EU Construction Products Regulation
obligations
A new guide to the EU Construction Products Regulation
(CPR) for building product manufacturers has been
published by Construction Products Europe.
The new CPR-2024 came into force on January 7 2025
and will be applicable as of January 2026. Available free
on application, the new guide details changes between the
new regulation and the previous CPR (No. 305/2011).
These include the obligation on manufacturers to provide a
Digital Product Passport DPP and greater emphasis on
products’ environmental as well as technical performance
to ensure they meet both safety and sustainability
standards.
See: https://www.construction-products.eu/publications/cpr-a-
guide-for-manufacturers_navigating-the-construction-products-
regulation-2/
The CPR-2024, says the CPE, establishes the framework
for free movement of construction products within the EU,
including those made in the EU and those imported into
the market.
“By harmonising the conditions for assessing and
declaring the product performances and conformity, the
CPR‐2024 aims at ensuring a consistent approach across
all EU Member States,” states the CPE guide. “This
uniform approach aims to improve the reliability and
transparency of product information by requiring
consistent communication of essential characteristics and
requirements for a safer, more sustainable, and
competitive construction sector within the EU.”
The backdrop to the wider environmental obligations
introduced for building products manufacturers by the
CPR-2024 is the EU Green Deal, the strategy aimed at the
EU achieving climate neutrality by 2050.
Manufacturers will have to detail the life-cycle
environmental performance of their products (according to
the requirements of the EN15804 standard for
Environmental Product Declarations) .
The guide gives specific instances where CPR-2024
obligations on manufacturers apply to importers and
distributors. Among these are:
where they place a product on the market under
their own name or trade mark
where they intentionally or unintentionally (for
instance by incorrect storage) modify a product
so affecting its performance
where they make products available on the
market with a declared use that deviates from the
one declared by manufacturers in their DoPC
where they claim characteristics for products that
deviate from those declared by the manufacturer.
See:
https://forms.office.com/pages/responsepage.aspx?id=DSqPi6U
KyEWnMjX-fKGPTx4YoILlhgJAhvyEO-
C0K8ZURTdRU1gyUlJJUjU5SlpEUTdLUlhYMUxURC4u&ro
ute=shorturl
EU unemployment rate down
According to latest figures, EU member state average
unemployment average fell to its lowest level this century
in March 2025. This follows Eurostat analysis showing
that the EU employment rate in 2024 reached its highest
level since 2009.
According to Statista, average unemployment in the EU
between January and March 20225 was 5.8%. It has been
declining since the summer of 2020 when it peaked at
7.8%, with a strong recovery in jobs after the pandemic in
much of the Union.
This leaves the EU lagging the US, where unemployment
in April 2025 was recorded at 4.2%.
As of March 2025, Spain, Finland, Greece, Estonia and
Sweden were the worst five performers in terms of
unemployment with rates of 10.9%, 9.4%, 9%, 8.7% and
8.1%. The top five were Czechia, Poland, Malta, Slovenia
and Germany. Their rates were respectively 2.6%,
2.7%,2.8%, 3.2% and 3.5%.
According to an April 2025 Eurostat report EU
employment in 2024 rose to 75.8% of the 20–64-year-old
population. That translated into a workforce of 197.6
million people.
The top five countries in terms of employment were the
Netherlands at 83.5%, Malta 83%, Czechia 82.3%,
Sweden 81.9% and Estonia 81.8%. The lowest five in
terms of employment were Italy at 67.1%, Greece 69.3%,
Romania69.5%, Spain 71.4% and Belgium 72.3%.
See:
https://www.statista.com/statistics/685957/unemployment-rate-
in-the-european-union/
https://ec.europa.eu/eurostat/en/web/products-eurostat-
news/w/ddn-20250415-1
https://ec.europa.eu/eurostat/web/products-euro-indicators/w/3-
02052025-
bp#:~:text=In%20March%202025%2C%20the%20youth,thousa
nd%20in%20the%20euro%20area.
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