October 8 2026
Building The North – Autumn 2026: Contollo’s Market Report
Delivery, not demand, now the UK's biggest construction risk
Today we’re releasing our Autumn 2026 Building the North report, which shows that the UK construction industry is entering a new phase where delivery capacity, not demand, is becoming the defining risk for contractors and clients. Across infrastructure, industrial and regeneration sectors, new orders are rising sharply, but output continues to stall, widening what we call the Delivery Gap.
The S&P Global PMI has remained below the 50.0 growth threshold for 20 consecutive months, with residential activity contracting to 37.6. We’re seeing this disconnect shape procurement behaviour, tendering patterns and programme certainty across the UK.
As our Director Matthew Mackey notes: “Demand is returning and pipelines are rebuilding, but delivery capacity is not keeping pace – and that gap is now shaping every major programme.”
Our live tender intelligence, Contollo Pulse, shows contractors under growing pressure. Ninety‑five per cent of respondents expect construction costs to rise over the next 12 months, with almost three‑quarters anticipating increases of 2–5%. Sixty‑three per cent say lack of capacity is now a primary reason contractors are declining tender opportunities, and 19% report contractors becoming markedly more selective in the projects they pursue. This reflects a market that is tightening but still disciplined, with contractors pricing cautiously while managing capacity constraints.
ONS Workforce Jobs data shows the Northern construction workforce stands at 515,000. Despite significant shifts in activity, only around 2,000 additional construction jobs have been created since 2021, intensifying pressure across specialist trades including M&E services, utilities, fire engineering and technical subcontracting. These disciplines are now consistent bottlenecks in tendering and programme planning.
Northern orders rose 17.6% in 2025 and 32.6% in Q1 2026. Infrastructure orders grew 38.4%, driven by energy transition programmes, utilities investment and major regeneration schemes. The North is providing some of the clearest early evidence of the Delivery Gap emerging nationally.
Looking ahead, contractors expect pressure to intensify. Forty‑two per cent anticipate capacity tightening further over the next year, while only 26% expect it to improve, signalling continued pressure on delivery capability through 2027.
A two‑tier residential market is emerging. Low‑rise housing is stabilising, while high‑rise, Build to Rent and PBSA remain constrained by viability pressures. Cost, finance and regulatory requirements, including the Building Safety Levy coming into effect in October, are preventing many schemes from reaching market.
Our “New Age of Uncertainty” analysis highlights how global disruption continues to shape project risk. Energy markets, freight routes, steel tariffs and carbon regulation continue to affect cost and programme certainty. The Strait of Hormuz, through which around 20 million barrels per day of crude and oil products were shipped in 2025, remains a critical chokepoint.
We forecast increasing pressure from 2029 onwards, driven not by inflation but by the widening disconnect between demand and delivery.
As Matthew summarises: “The pipeline is rebuilding, but delivery is becoming harder. The next phase of the market will be defined by who can convert pipeline into construction activity.”
