Consultant Arcadis is forecasting a cautious construction recovery amid early signs of renewed momentum across key sectors after a period of stagnation.

The consultant’s latest Summer 2025 tender forecast suggests the industry could outpace wider economic growth, with new orders stabilising, sentiment picking up, and contractor performance improving after a tough 2024.

Arcadis flagged a shift in government policy as a major boost, with the latest Comprehensive Spending Review unlocking 10-year funding settlements for housing, health, education and prisons — giving contractors confidence to invest again.

Other growth hot spots include network infrastructure, where water companies are ramping up AMP8 delivery plans, and city transport schemes, buoyed by a £15.6bn funding pipeline running to 2031/32.

But Arcadis warned that dangers abound with sticky inflation dampening prospects for further interest rate cuts and concerns about increased tax burden. It said that this means the rate of recovery would be uneven.

The report notes that single-stage procurement is gaining traction in non-HRB commercial markets, opening new doors for Tier 2 contractors.

Tender price inflation forecasts remain flat for now, with clients still waiting for firmer signs of a sustained rebound.

Simon Rawlinson, head of strategic research and insight at Arcadis, said: “While economic headwinds persist, the construction industry maintains cautious optimism for the future, thanks in part to new government investment and support.”