Key findings
Confidence challenged, but opportunities remain
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1
Macroeconomic uncertainty continues to shape decision-making
Recent events in the Middle East have weakened the economic outlook. The Office for Budgetary Responsibility (OBR) has lowered growth forecasts, investors are becoming more cautious and decisions are taking longer.
2
Political uncertainty is weighing on investment decisions
Following the Prime Minister's resignation, investors are watching the Labour leadership contest closely. Many organisations are delaying major commitments until there is greater clarity on future government priorities and the investment landscape.
3
Material cost pressures are beginning to re-emerge
Higher energy prices and supply chain disruption are starting to affect material costs. Some manufacturers have announced price increases, particularly for energy-intensive products.
4
Construction remains resilient, but growth is fragile
Repair and maintenance work continues to support activity, but new work orders fell sharply in the first quarter of 2026. Projects are moving more slowly and face more scrutiny at key decision points.
5
Economic conditions are broadly stable, but improvements may take longer than expected
Inflation has eased and is moving closer to target. But, geopolitical uncertainty could delay further interest rate cuts and create more volatility during the second half of the year.
6
Labour pressures have eased, not disappeared
Reduced activity has eased wage inflation, but skills shortages remain. Competition for specialist skills is likely to rise as activity returns.
7
Confidence must be built, not assumed
The organisations making progress aren’t waiting for market conditions to improve. They’re building confidence through better data, use of technology, strong partnerships and an adaptable mindset. This helps them make informed decisions, manage risk and keep projects moving.
Economic indicators
A stable picture,
but changeable conditions
GDP
Source: ONS – quarter to quarter change
+0.6%
in 2026 Q1
+0.2%
in 2025 Q4
Inflation (CPI)
Source: ONS – 12-month rate at end of quarter
+2.8%
in 2026 Q2
+3.4%
in 2025 Q4
Materials and Commodities
Source: BCIS materials cost index - quarter to quarter change
+2.9%
in 2026 Q2
+2.5%
in 2025 Q4
Labour costs
Source: BCIS labour cost index – 12-month rate at end of quarter
+3.4%
in 2026 Q2
+6.4%
in 2025 Q4
Government borrowing
Source: ONS – Estimate of UK public sector net debt as % of GDP
94.2%
of GDP in 2026 Q2
95.3%
of GDP in 2025 Q4
