Construction is collapsing.
July’s PMI data shows UK construction activity fell to 44.3 from June’s 48.8 – the worst performance since May 2020.
This isn’t normal market volatility.
29% of firms report site delays and shrinking order books. New work has declined for seven consecutive months. Contractors describe widespread hesitation to commit to new contracts.
The Government’s 1.5 Million Home Fantasy
The government promises 1.5 million new homes by mid-2029. Centre for Cities analysis reveals even if private development reached its historical peak, Britain would still fall short by 388,000 homes.
Last year, 234,400 homes were completed. This year’s projections show a decline to around 150,000. To hit the target, annual builds must reach 450,000 by 2028-29.
That’s a level of housebuilding not seen in over 50 years.
The Workforce Reality Check
The UK needs 251,500 extra construction workers over the next five years. The industry must recruit 50,300 new workers annually while already advertising 38,000 vacancies monthly.
31% of construction employers cite finding skilled staff as their primary challenge.
By 2035, over one-third of current construction workers will retire. The number of EU construction workers in London dropped from 42% to 8% between 2018-2021, with 200,000+ EU workers leaving UK construction since 2019.
Planning System Bottlenecks
1% of local planning authorities meet the statutory 13-week deadline for processing major applications.
The planning system creates delays that compound workforce shortages and economic uncertainty. Politicians promise reforms, but the regulatory framework remains unchanged.
What This Means for Construction Professionals
Political promises don’t match industry reality.
Expect extended project timelines, continued labor shortages, and uncertain policy environments. The PMI collapse signals structural problems that planning reforms alone cannot solve.
Firms are adjusting capacity expectations and workforce strategies for a prolonged downturn.
The government’s housing targets are mathematically impossible under current conditions. The July PMI data confirms we’re facing a crisis that requires solutions beyond traditional policy approaches.
