The UK construction industry has a role in almost every aspect of our society. This all-encompassing sector is responsible for our infrastructure including transport, housing, and the nation’s energy supply. Discover details of the value of the UK construction industry and the challenges it is facing.

Economic impact

Construction is one of the UK’s major industries. In 2022, it drove 6.2% of the UK’s GVA (Gross Value Added), a measurement which tracks the increase in economic value due to a sector’s production or services. The GVA takes into account production costs, excluding labour.

This means that, outside of services which are the UK’s biggest earners – think retail, financial, and healthcare – the construction industry is the second-most profitable sector after manufacturing.

Social development

The construction sector is responsible for all infrastructure development and maintenance in the UK. The industry therefore has a major part to play in improving key aspects of our lifestyle, from roads to the buildings where we live and work.

In 2021, infrastructure growth increased by a staggering £7.3 billion compared to 2020 figures. £5.6 billion of this was new road development, with the rest primarily invested in improving train travel. An example of investment in our railways is the recently scaled back HS2 project which aimed to link Midlands and northern cities with London.

Sustainable values

With a view to slowing climate change, the UK has pledged to have net-zero CO₂ emissions by 2050. This involves moving away from fossil fuels and embracing renewable energy instead, a revolutionary move which will be driven by the construction industry.

For example, the UK is aiming to decarbonise the national grid by 2035 and rely instead on power generated by home-grown green energy. This plan is grounded in the implementation of green technologies such as building and connecting off-shore wind farms.

With residential buildings responsible for a high proportion of the UK’s carbon emissions, housing is also set for a transformation. The construction industry will be driving improved insulation and the replacement of traditional gas boilers with green heating systems.

Future challenges

As well as facing the difficulties involved with the move to a more sustainable society, the UK construction industry is facing substantial short-term future challenges.

A combination of Brexit, the pandemic, and disrupted fuel supplies following Russia’s invasion of Ukraine have led to a shortage of essential materials. Exacerbated by the fact that the UK construction industry is in a period of growth, limited supplies is increasing product cost and slowing the pace of building projects.

These delays and the subsequent inflated estimate contract value (ECV) of each project has led to increased premiums in builders’ insurance for UK construction companies, as well as a predicted fall in sector activity in 2023. This is making it harder to keep projects profitable, especially for smaller companies working outside of the public sector.