UK housebuilding slowdown: what it means for businesses
UK housebuilding slowdown and what it means for businesses
New data shows UK construction output saw its steepest fall since May 2020. According to the latest S&P Global Market Intelligence survey, the sector’s purchasing managers index (PMI) dropped from 48.8 in June to 44.3 in July—well below the 50 mark that separates growth from contraction.
Housebuilding hit hardest
Housebuilding led the decline, with its own index falling from 50.7 to 45.3. Civil engineering also recorded a sharp fall, and commercial construction slowed. Rising unemployment, stubborn inflation, and global trade pressures—most recently Donald Trump’s new tariffs—are adding to the strain.
Challenging government targets
These figures cast doubt on the government’s aim to deliver 1.5 million new homes this Parliament. Industry experts say the target overestimates the sector’s building capacity. Labour shortages, higher material costs, and April’s employer National Insurance rise all add to the challenge, despite a promised £39 billion investment in social housing and planning reforms.
What it means for your business
A slowdown in construction ripples through the economy. Builders, trades, suppliers and professional services—right down to local retailers—can feel the effects. Slower housing delivery may also impact developers’ cashflow and financing plans, while rate changes could influence borrowing costs. The Bank of England’s recent rate cut to 4% and expectations of further easing into 2026 may offer some relief, but planning ahead is key.
How I can help
If your business is linked to property or construction—or relies on housing growth to drive demand—now’s the time to review budgets and forecasts.
We can look at:
- Cashflow planning to handle slower payments or fewer projects
- Tax planning to make the most of current allowances and reliefs
- Scenario modelling to test how interest-rate changes or project delays might affect your finances
A proactive review can help keep your business resilient as the housing market and wider economy adjust.
