UK Builders Face Longest Downturn Since the Global Financial Crisis

The UK construction sector is experiencing its longest downturn since the 2008 global financial crisis, with persistent demand weakness and cost pressures continuing to weigh on activity. Builders have seen declining orders for new projects amid a sluggish housing market and reduced public infrastructure spending according to PMI data.

The S&P Global UK Services PMI for December 2025 came in at 51.4, revised down from a preliminary reading of 52.1, but still indicating modest growth for the eighth consecutive month. However, the pace of expansion was minimal and closely aligned with the 2025 average.

Survey respondents noted cautious optimism as client confidence showed tentative signs of recovery following an extended period of uncertainty before the recent budget announcement. Despite this, the overall outlook for the sector remains muted as businesses continue to navigate rising costs and shifting economic conditions according to recent analysis.

Why Did This Happen?

The UK services sector's growth in December 2025 was marked by modest but consistent activity, with total new work rebounding slightly. However, the pace of expansion remained below expectations for the year. Businesses cited pre-Budget anxiety and macroeconomic volatility as key constraints.

Employment in the sector has continued to decline for the fifteenth consecutive month, though the rate of job losses has eased. Companies reported that pay pressures and thin margins are making it difficult to justify hiring despite some improvement.

How Did Markets Respond?

Ucommune International Ltd (UK), a company with recent earnings reports, has faced significant financial challenges. For the latest quarter ending 2025-10-17, the company reported earnings per share of -3.49 and revenue of 64.96 million, reflecting continued losses. These figures highlight ongoing operational difficulties in the real estate and services space.

The company's trailing twelve months (TTM) net profit margin stands at -22.29%, and its TTM return on investment (ROI) is -41.88%. These metrics suggest a struggle to generate sustainable earnings amid high operating costs and competitive pressures.

What Are Analysts Watching Next?

Inflationary pressures have intensified in the services sector, with input costs rising at their highest rate in seven months and output charge inflation rebounding after a recent dip. Businesses are managing these pressures by passing on higher costs to clients, though this may further deter demand in an already weak environment according to PMI data.

Looking ahead, business activity expectations for the year improved from November and reached the second-highest level since October 2024. Analysts will be monitoring how companies adapt to these conditions, including whether investment in capacity and hiring resumes as confidence stabilizes according to market analysis.

Investors are also watching how the UK government's fiscal policies and potential budget adjustments could influence demand in the construction and services sectors. A clear policy framework to stimulate growth and attract investment could provide much-needed relief for builders and service providers struggling through this prolonged downturn according to recent reports.