Construction industry trends and challenges in 2025

What are the likely trends and challenges facing the construction industry in 2025? We looked at something similar last year in our blog, anticipating trends, so this is an updated version now we’re in 2025. We’re seasoned suppliers to the construction industry in the UK and Europe here at Ryder Services, so we like to keep our finger on the pulse of construction industry trends and challenges.

What happened in construction in 2024?

Let's have some 2024 stats to set the scene.

The UK economy saw a 0.1% growth in GDP in November 2024, with the construction sector playing its part here. We must also mention the small matter of a 16.5% surge in new orders during Q2 2024 bolstering industry confidence.

Civil engineering led the way to the sector’s bounce back last year, chiefly because of energy infrastructure projects, largely renewables.
Improved domestic conditions and retrofit demand slightly boosted the momentum in commercial construction. There was perceptible slowing down in activity leading up to October 2024’s budget with what looked to be a knock-on delay in spending decisions, especially in sectors most impacted by the National Insurance Contribution and National Living Wage hikes.
The UK government’s ambitious new building targets lit a fire under housebuilding, which seems to have levelled off as we head into 2025, perhaps because of what has been widely suggested as a lack of clarity and wavering consumer confidence.

The Industrial Strategy Green Paper is a government consultation document that outlines the UK's industrial strategy. It highlights the government's priorities for economic growth and environmental sustainability but fails to mention construction. But it did put the accent on Net Zero, and this should likely bring opportunities for our industry.

The 2024 Autumn Budget’s proposed public sector spending includes significant infrastructure investment. This runs the gamut of rail route upgrades and road repairs, to support for the Affordable Homes Programme and Warm Homes Plan.

Technology, sustainability and construction in 2025

PwC UK's latest Construction and Housebuilding Outlook forecasts a 2.9% growth in 2025, following a 2.1% contraction in 2024.

Leonardo Da Vinci said: ‘Simplicity is the ultimate sophistication’ and technology and construction seem to continue to stick to this principle this year. Eco-friendly building materials like sustainable timber, recycled concrete, and energy-efficient insulation all come under the banner of sustainability and construction and simplifying processes. Renewable energy solutions, like solar panels and heat pumps, are becoming more integral to building projects to align with stricter environmental regulations and client expectations.

The Building Safety Act

Speaking of which, The Building Safety Act 2022 became law in the UK in April 2023 in response to the Grenfell fire tragedy in London. It continues to shape trends in 2025 of course. Construction companies must comply with stricter building regulations, and meet higher standards for safety, sustainability, and efficiency. Digital tools, like compliance tracking software and AI-powered risk assessment platforms, are likely going to prove increasingly essential so that projects meet regulatory requirements. Collaboration between contractors, suppliers, and regulatory bodies is key to navigating these challenges effectively.

Labour shortages in the construction industry in 2025

Skills Scotland has been going since 2008, but Skills England only came online in 2024. Its creation should bring investment in training and development south of the border this year.

But what about the labour shortage, skills gap, and an ageing workforce? Automation and robotics as potential solutions, leastways to bridge the gap before a trained workforce is mobilised, looks like a 2025 construction trend and challenge all rolled into one. Repetitive tasks taken care of, skilled workers can turn their attention to more complex tasks.

Government infastructure projects

Infrastructure investment remains a major driver of growth within the UK construction sector. Large-scale projects, including High Speed 2 (HS2), Crossrail 2, and the expansion of offshore wind farms, are creating new opportunities for contractors and suppliers.

Meanwhile, The National Infrastructure Strategy continues to play a critical role in shaping the industry's future, ensuring long-term investment in transport, energy, and digital infrastructure.

New funding for energy-efficient buildings, eco-friendly materials, and retrofitting existing structures to meet modern energy standards is also likely to benefit the sector in 2025.

Digitisation and construction in 2025

The ongoing digital transformation of the construction sector will by its very nature will only accelerate in 2025. Cloud-based project management tools, AI-driven predictive analytics, and the Internet of Things (IoT) are fast being integrated into day-to-day operations to boost efficiency, help manage costs and improve project outcomes.
New technologies make possible real-time construction site monitoring, making for improved decision-making and risk management. Companies that embrace digitalisation are perhaps more likely to gain a competitive edge in 2025.

Health and safety and construction in 2025

We touched on this in our last blog, and health and safety is always going to be ever changing as technology makes workplaces safer. The adoption of wearable technology, like smart helmets and vests, is helping to monitor workers' health and safety in real-time, hopefully preventing accidents and improving overall site conditions.

Mental health awareness will also gain more traction in 2025, with more companies implementing support programs to mitigate worker burnout.

Sources:

ngconstructionltd.co.uk
natwest.com
centurybusinessfinance.co.uk
pwc.co.uk
curriebrown.com