Construction activity remains weak in face of policy uncertainty and financial pressures
Joe Sullivan September 4th 2025
Joe Sullivan, partner at MHA, comments on today’s S&P construction PMI data, which remains below 50.
"The pace of decline in the construction sector eased slightly in August; however, the PMI remains below 50, highlighting a continued slowdown in activity and investment in the face of a climate of policy uncertainty and increased financial pressures.
“The ongoing rumours of a new SDLT and a 'mansion tax' are creating a significant drag on the property market. This policy uncertainty is already stalling investment across the UK.
Further speculation over a national property tax, changes to CGT and IHT, and a potential new NI charge on rental income are causing would-be investors to delay decisions and are already impacting transaction volumes. The Autumn Budget being delayed until 26 November is therefore unhelpful. There is also an indirect potential hit to construction volumes as potential changes to pension taxation could reduce investment in property funds.
“The current tax system, particularly Stamp Duty, is a structural drag on the market. It discourages both up-sizers and down-sizers, creating a lack of mobility that is bad for everyone. By disincentivising people from moving, it not only reduces transaction volumes but ultimately lowers overall tax receipts.
Our expert's final thought
"While major infrastructure projects like the Lower Thames Crossing remain a positive driver, the overall outlook for the property market is being suppressed by a combination of policy uncertainty and heavy taxation. Commercial building was the only relative bright spot however, housing and civil engineering activity struggle to gain momentum."
