UK economic impact
GDP growth
0.30%
2025 Q2
0.70%
2025 Q1
Inflation (CPI)
3.80%
2025 Q3
3.60%
2025 Q2
Fragile growth, firm opportunity
The Government’s June Spending Review confirmed what many expected: the UK economy economy is still under pressure.
Investment is flowing into national priorities like energy, transport, and defence. HS2 and Sizewell C are still moving ahead, signifying the government’s long-term ambition. But elsewhere, budgets are being cut. And with tax rises expected in the autumn, momentum may slow.
Growth is still there – but the forecast is softer
The Office for Budget Responsibility (OBR) has cut its 2025 growth forecast from 2.0% to 1.0%. Growth for 2026 and 2027 is expected at 1.75%.
The UK economy grew by 0.3% in Q2 2025, a slowdown from 0.7% in Q1. But construction continues to underpin growth. Output in the sector rose by 1.2% over the same period, reinforcing its role as a key driver of economic performance.
Inflation remains high at 3.8%, driven by cost-of-living pressures. In response, the Bank of England has cut interest rates to 4.0%. More cuts could follow. If rates fall below 4.0%, we expect private capital will start to move again.
Public finances are tight
Government debt is now 96.4% of GDP, a level last seen in the 1960s. That makes borrowing more expensive. UK 10-year bonds are yielding around 4.5%, so big public investments now come with tough trade-offs.
Consumer confidence is also under pressure. When people feel uncertain about their finances, they spend less and move less. Independent data shows that UK homeowners now move half as much as before the 2008 financial crash. This presents a clear risk for the residential sector.
Now is not a bad time to build
The outlook may feel subdued, but conditions for construction remain manageable.
Material costs have levelled off. Energy markets have steadied. And there’s available capacity in the supply chain.
Making the most of this moment will take imagination. Project teams should explore different delivery models and consider flexible procurement options.
Above all, now is the time for foresight. Construction is a long game. The decisions made today will come to life in 2027 and beyond. At this point, if government initiatives happen as planned, the picture may be much brighter.
With a measured approach and smart analysis, much of the current uncertainty can be turned into opportunity.
Global economic outlook
Global uncertainty grows, but the UK holds steady
US tariffs came into effect in April, adding pressure to an already cautious global economy. According to the IMF, the unpredictability of US economic policy is proving just as disruptive as the tariffs themselves.
Volatility is rising
Inflation is starting to stabilise in many countries. But in the U.S., pressures remain high. At the same time, high levels of national debt and public deficits are placing question marks over future government spending. This is making bond markets, and by extension the macroeconomic landscape, more volatile.
Global growth forecast dips
In response, the IMF has lowered its global growth forecast:
- 2025: now 3.0%, down from 3.3%
- 2026: now 3.1%, down from 3.3%
Advanced economies are expected to feel it most. The IMF predicts US growth at 1.9%, Eurozone at just 1.0%.
Meanwhile, the OECD sees China’s growth falling from 5.0% to 4.8% in 2025.
The UK remains resilient
The UK isn’t immune to these pressures, but it’s well placed. A strong legal system, transparent markets, and consistent regulation continue to attract global investment.
While global growth slows, the UK remains a dependable and investable market. For clients who plan ahead, this is a window of opportunity.