Construction Sector Suffering from ‘Restricted Market’

Posted by Construction Industry News Magazine on 8th September 2025 -

The UK construction industry is suffering from a “restricted market” amid an eighth consecutive month of activity decline says leading construction lawyer, David Morris.

Commenting on the day the latest S&P Global UK Construction Purchasing Managers’ Index (PMI) was released, David, a Partner at Knights, said the market is experiencing a noticeable slowdown with costs staying high and more people seemingly taking a “risk averse” approach to negotiations.

The latest PMI figures, showed construction activity in the UK declined for the eighth month in a row last month. The PMI indicator of 45.5 in August 2025, while better than the 44.3 reading in July, the lowest reading for five years, is still below the neutral 50.0 value and has been so for every month so far in 2025 – the longest period of decline since the 2020 covid outbreak.

David Morris, a Partner at Knights, said: “We have seen a marked rise in contentious matters, mostly non-payment and generally because of spurious deductions or real delay, which is illustrative of a restricted market.

“Service costs have remained high and some are increasing, while property prices have generally stagnated, so yields, especially for SMEs, are not what they have been previously.

'This means we are seeing a lot more risk aversion in contracts and it is often taking longer to negotiate contracts both up and down the chain. I have recently seen more parties walk away from contracts or propose very different alternatives than ever before.

“Additional external factors, such as the worldwide fluctuation in markets and more locally, the delays caused by the Building Safety Regulator, are also contributing to what is clearly a tight market currently.

“That said, it’s not all doom and gloom. There are still plenty of projects ongoing and for the brave, there’s a lot of work there to be had.”