Blog

“Stability is the single most important precondition for economic growth,” Reeves told the House of Commons as she delivered the Statement today, 3 March. “That is why we have committed to a single major fiscal event a year, limiting major policy changes to the Budget and giving businesses and households the certainty that they need.

“Today, the new forecasts from the Office for Budget Responsibility show that our plan is the right one: Inflation is down, borrowing is down, living standards are upa nd the economy is growing.

“Mr Speaker, this government has restored economic stability.”

Industry leaders in construction and infrastructure moderately welcomed the statement’s emphasis on economic stability and long-term ambition but the sector has also stated it urgently needs delivery plans and planning reform to perform efficiently.

Key players are also calling for more Government implemented measures to tackle skills shortages the construction sector is seriously suffering from.

While infrastructure didn’t play a big part in this year’s Spring Statement, there were signals that the government intends to deliver on its recent promises to stimulate economic growth with a steady pipeline of construction projects.

Beyond this, Reeves’ forecasts have shown borrowing is down by nearly £18bn compared to the Autumn.

The government is therefore expecting to spend nearly £4bn less on debt interest next year than was forecast in the Autumn and instead utilise this money for public services including the NHS and public transport.

As a result of other decisions put forward during this year’s Spring Statement, the devolved governments of the UK are due to receive an additional £1.8bn Resource Departmental Expenditure Limits excluding depreciation (RDELex) and £45M general Capital Departmental Expenditure Limits (CDEL) through the application of the Barnett formula between 2026-27 and 2029-30.

With this:

• The Scottish Government will receive an additional £900M RDELex and £20M CDEL
• The Welsh Government will receive an additional £540M RDELex and £15M CDEL
• The Northern Ireland Executive will receive an additional £380M RDELex and £10M CDEL

This is significant for the built environment because the devolved governments could use this money for infrastructure construction and other services which employ contractors and consultants.

Slow speed of decision making is dampening growth

Civil Engineering Contractors Association (Ceca) director of policy and public affairs Ben Goodwin said that while stability matters “in a period of international uncertainty”, he stressed that “confidence ultimately depends on delivery”. Ceca’s recent Workload Trends data, he added, show some activity improvement in parts of the sector but weak order books overall, a sign of “a continuing gap between infrastructure ambition and work reaching site”.

“If the UK is to deliver on growth, connectivity, energy security and net zero, we need a stronger focus on implementation – with dependable pipelines, timely decisions, and procurement approaches that support long-term value and investment,” he continued.

Pagabo deputy chief executive of procurement Amman Boughan echoed this view, discussing how projects are bought. He warned that short-term, price-first procurement “rarely” delivers the best outcomes and urged greater use of procurement routes that share risk and support private–public partnerships.

“In the chancellor’s Spring Statement, stability was named the single most important pre-condition for economic growth, but this isn’t the current reality for the public and private sectors – with the Office of Budget Responsibility (OBR) now forecasting slower growth and further unemployment this year,” he said.

“We called for stability and investment efficiency ahead of the Autumn Budget last November, but our call to action has been met with inaction, and the slow speed of decision-making continues to dampen growth potential.

“Very recent construction sector data shows that that planning approvals, main contract awards and project starts are all down compared with the preceding three months and the previous year.

“Instability and uncertainty are market conditions that we’ve been experiencing for a long time, but unsavoury political stories and disruption have only pulled focus elsewhere and made the start to 2026 somewhat turbulent.”

Boughan further argued the downtrend in construction activity does not marry with Government ambitions and the nation’s ability to deliver what is being promised.

“While there is great intention to invest, there is an ominous question as to whether government ambition marries up with current market capacity and ability to deliver. For example, our own research into the housing sector recently revealed overwhelming skepticism in meeting the current housing targets,” he said.

“However, I’ve said it before and I continue to believe that the long-term challenge is not the level of investment or market capacity; it is how effectively that investment is deployed.

“Procurement can make a significant difference. Instead of taking a short-term view on things and prioritising price, there needs to be greater focus on delivering great outcomes, underpinned by speed and quality. After all, buying cheap very rarely means delivering cheap once the heightened whole-life cost is taken into consideration – and as the old adage goes, buying cheap can also mean buying twice.

“Private enterprise backed by public ambition must become the norm, supported by the right procurement routes to ensure effective spend. The public and private sectors should prioritse effective partnerships and sharing risk, which will ensure a financial return on investment, impactful outcomes and meaningful social legacy.”

Planning promises ‘must be translated into action’

Several industry figures called for clearer timetables and faster action on the government’s proposed planning reforms, being brought forward by the Planning and Infrastructure Act among other measures.

Bam UK & Ireland chief operating officer John Wilkinson welcomed the hopeful nature of the Act but said ministers must turn these promises into action and prevent red tape from continuing to stall projects.

“The Government’s commitment, to ease planning restrictions through its Planning and Infrastructure Bill is encouraging,” he said. “Now those promises must be translated into action. If we are to deliver lower energy bills, red tape cannot be allowed to stall vital projects for years.

“The construction industry was expecting much more from the chancellor’s Spring Statement including an update on Britain’s planning system.

“Britain is currently at a crossroads in how it builds, and with the urgent need to start building better, clarity on the reforms to the planning system are essential.

“The Autumn Budget last year injected a sense of optimism into the construction industry, sparking many conversations around how the current planning system is fragmented and how these new improvements are welcomed.

“The introduction of the Planning and Infrastructure Bill in December last year was also momentous, however we are yet to see the full benefits this has to offer.

“We know infrastructure delivers significant economic returns of £3 for every £1 invested.

“For any government serious about growth, the case is unambiguous. Yet when it comes to delivering significantly important projects that benefit the UK, these projects can be held off for years due to red tape and disputes, even when the net effect is positive for Britain as a whole.”

Wilkinson also argued that the Spring Statement has done nothing to address the UK’s skills shortage in the construction sector and plug the gap of 1M additional workers it will need to meet the Government’s ambitions.

“Whilst today’s Spring Statement delivered by the chancellor has reaffirmed the importance of growth, greater clarity is needed on how the Government will support skills development to match the scale of infrastructure and energy projects planned across the UK,” he said.

“The construction industry will play a central role in delivering the UK’s net zero ambitions, but this transition will only be possible if we have the skilled workforce required to deliver it.

“Over the next decade, projections suggest the UK will need nearly 1M additional construction workers by 2032 to keep pace with housing and infrastructure investment. We urge the government to introduce further measures that support skills development and workforce growth, ensuring the industry is equipped to deliver the sustainable infrastructure needed to meet the UK’s net zero targets while driving long-term economic growth.”

Ardent chief executive Jon Stott described the statement as reinforcing the government’s long-term infrastructure commitment but said the central challenge is coordination across landowners and developers to ensure schemes move from planning into delivery.

“The Spring Forecast reinforces the Government’s commitment to steady economic growth and the continued delivery of long-term infrastructure investment,” he said.

“While there were no major new sector-specific announcements, the direction of travel remains clear: focus on implementation, productivity and unlocking development at pace. For projects spanning transport, renewables and regeneration, the challenge is increasingly one of coordination and execution.

“Securing funding is only part of the equation; ensuring schemes progress efficiently from planning through to delivery requires early alignment between landowners, developers, utilities providers and public bodies.

“As growth ambitions continue alongside the energy transition and regional development priorities, effective land and stakeholder engagement strategy will play a decisive role in determining whether investment translates into tangible outcomes. The emphasis now is on delivery – turning long-term commitments into infrastructure, homes and resilient networks on the ground.”

Building Cost Information Service (BCIS) data services director Carl Horton said the OBR’s downgrade of GDP growth to 1.1% in 2026, combined with geopolitical instability, notably recent escalation in the Iran, is likely to keep investment subdued. He warned that spikes in energy or commodity prices could push up transport and materials costs, lifting tender prices and threatening project viability.

“Weaker growth expectations for 2026 and a looser labour market are more likely to continue tempering demand,” he said.

“Prolonged unrest in the Middle East also raises risks for input construction costs.

“While it’s too early to draw firm conclusions, a spike in energy prices, such as the increases reported in the oil and gas markets this week, could see contractors and subcontractors paying more for transport and materials.

“This would place upward pressure on tender prices and could constrain project viability or delay investment decisions.

“The chancellor welcomed higher-than-expected reductions in inflation and borrowing costs.

“However, the OBR notes that its forecast closed before conflict in the Middle East escalated, potentially outdating new forecasts before they were published.

“For now, the government’s housing and infrastructure commitments remain in place but scope for additional, fiscal support or rapid delivery seems restricted.

“Any deterioration in the growth outlook, or sustained increase in energy prices, could quickly place pressure on spending plans, and reduce the likelihood of a rapid uplift in construction output.”

EA Technology strategic adviser at Fundamentals Jon Hiscock said he believes the Spring Statement did not provide signals needed for the Government’s desire to modernise the electricity grid.

“The Spring Statement was not expected to deliver new energy policy. But it would have been reassuring to have a clear fiscal commitment to helping the UK modernise its electricity network,” he said.

“Clean Power 2030 will not be delivered by ambition alone. The electricity system must evolve to do four things well: reduce bills through better voltage control, become more flexible as demand shifts, unlock capacity so new connections don’t stall, and above all remain resilient in a more volatile energy era.”

Like what you’ve read? To receive New Civil Engineer’s daily and weekly newsletters click here.