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Latest quarterly economic brief from construction consultant Arcadis focuses on signs of recovery.

Despite adverse economic conditions, global unrest and political instability, Arcadis says it is ‘cautiously optimistic’ for the UK construction industry, with several sectors beginning to scale up. Its projections suggest that the construction industry is growing faster than the wider economy.

However, its tender price inflation (TPA) forecasts remain unchanged from three months ago, as recovery signs are still not overwhelmingly convincing.

While sticky inflation is slowing the rate of interest rate cuts, there are early signs of recovery it says, with orders regaining some lost momentum and improvements in industry sentiment.

New build construction workload increased marginally in the first quarter 2025 and the outlook is stabilising, Arcadis says.

With the government focusing on to social infrastructure, health, education, prisons and housing are demanding more construction work.

Water companies are scaling up efforts to meet their AMP8 commitments, but programmes are taking time to get started. This will likely lead to workload being delivered in a shorter period, Arcadis says.

An emerging trend towards single-stage procurement for larger new-build projects is creating opportunities outside of high-rise apartment blocks. This model is particularly suited to Tier 2 contractors and is gaining traction in commercial markets outside of London.

Simon Rawlinson, Arcadis head of strategic research and insight, said: “While economic headwinds persist, the construction industry maintains cautious optimism for the future, thanks in part to new government investment and support.

“Our latest analysis highlights that whilst recovery is at an early stage, positive momentum in key sectors such as network infrastructure, together with spending review surety in the public sector, provides a foundation for longer-term sustained growth.”

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