Resilient output, rising risks: the real state of UK construction

The latest ONS release shows that construction output still managed to grow in Q2 2025, up 1.2% on the quarter, despite wider economic stagnation. New work rose by 1.1% and repair and maintenance by 1.4%. It’s a clear sign of the sector’s resilience even as the broader economy struggles to gain momentum.

However, the same dataset shows that new orders fell by 8.3% in the quarter, a reminder that forward workload is not yet secure. Insolvency Service data adds further context: 3,984 construction companies entered insolvency in the 12 months to June, equal to 17% of all UK business failures. Delivery risk needs to be identified early and actively managed.

The data points to a market that is delivering steadily now but with underlying fragilities that could surface later. Our interpretation is not that projects should pause but that investors and lenders need assurance that delivery risk is actively managed. Monitoring financial resilience, testing budgets against cost volatility and maintaining clear visibility of contractor performance are practical steps that allow projects to proceed with greater certainty.

This blend of modest growth, pipeline weakness and elevated insolvency risk is exactly why close project monitoring is crucial to underwriting transactions, enabling capital to be deployed in a market that remains finely balanced.

At Kingswood, we support funders and investors with the visibility needed to navigate these risks. If you would like to discuss your next project, we’d be glad to connect.

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