The construction industry has faced a turbulent few years, with material shortages, rising costs, and economic uncertainty making it difficult for businesses to plan for the future. However, recent forecasts suggest that 2025 could mark the beginning of a new growth phase. According to the Building Cost Information Service (BCIS), new work output is expected to rise by 21% from late 2024 to 2029.
Despite this positive outlook, several key trends could impact construction firms in the coming year. Baldersons Insurance Services, a trusted insurance broker specializing in the construction industry, has compiled the latest insights to help businesses navigate these challenges and opportunities.
Labour Shortages Remain a Concern
One of the most pressing issues in the construction sector is the ongoing labour shortage. A recent report by Kingfisher warns that the UK construction industry could face a shortfall of 250,000 skilled tradespeople by 2030. Without enough qualified workers, companies may need to rely on inexperienced employees, potentially increasing workplace accidents and delaying projects.
To address this issue, businesses are encouraged to invest in training and upskilling programs, attract new talent through community outreach efforts, and improve workplace culture to retain existing employees. The government has also extended funding for small and medium-sized enterprise (SME) housebuilders as part of a broader initiative to construct 1.5 million new homes, which could help mitigate some of the workforce challenges.
Sustainability Takes Centre Stage
Environmental concerns continue to shape the construction industry, with increasing pressure from regulators and consumers to adopt greener building practices. The UK government has set an ambitious target of achieving net-zero carbon emissions by 2050, and since buildings contribute 25% of the nation’s greenhouse gas emissions, the industry must play a significant role in reaching this goal.
In response, construction companies are adopting innovative solutions such as engineered timber, modular construction, and electric machinery. Many firms are also integrating renewable energy sources, such as solar and wind, into their operations to reduce their carbon footprint.
Technological Innovations Driving Change
Advancements in technology are revolutionising the construction industry, improving efficiency, safety, and cost-effectiveness. Tools such as 3D printing, robotics, drones, and Building Information Modelling (BIM) software are becoming increasingly common on construction sites.
Generative artificial intelligence (AI) is another emerging technology with significant potential. AI-powered tools can optimise project designs, improve risk management, and enhance quality control. However, as companies rely more on digital tools, they must also strengthen their cybersecurity measures. The construction industry is one of the most targeted sectors for cyber-facilitated fraud, making robust digital security and cyber insurance essential for businesses.
Regulatory Changes and Building Safety Compliance
Companies involved in high-rise construction will continue to adapt to the requirements of the Building Safety Act 2022, which enforces stricter safety standards and risk management protocols. Additionally, the Grenfell Tower Inquiry’s final report, released in September 2024, is expected to lead to further regulatory updates. Businesses must stay informed about legislative changes to ensure compliance and minimize liabilities.
Conclusion
The UK construction sector is set for a year of both challenges and opportunities. By addressing labour shortages, embracing sustainability, leveraging technology, and staying ahead of regulatory changes, businesses can position themselves for long-term success.
At Baldersons Insurance Services, we are committed to keeping our clients informed about industry developments and providing tailored risk management solutions. For a more detailed analysis of these trends, you can download our full Risk Insights UK – Construction Trends for 2025 report.
For expert guidance on how to navigate these industry shifts and protect your construction business, contact Baldersons Insurance Services today.
