Trade body downgrades economic forecast for 2026

National trade body the BMF (Builders Merchants Federation) has downgraded its 2026 baseline forecast from +2.3% to -1.8% citing geopolitical uncertainty, subdued consumer confidence and softer economic conditions as reasons for the change.

The BMF’s Industry Forecast Summer 2026 sets out a range of factors that contributed to the ‘more cautious outlook,’ for the construction supply chain.

Current pressures include falling demand for the supply of building materials, with ongoing economic uncertainty and predicted rising inflation set to further impact spending on housebuilding and home improvements.

BMF CEO John Newcomb said: “Weaker workloads, delayed project starts and ongoing concerns about future demand have created a challenging trading environment for the building materials sector.

“Persistent concerns about household finances, inflationary pressures and the wider economic outlook continue to constrain housing market activity and home improvement spending.

“Markets such as London, with greater exposure to housing and commercial development, have generally faced the most difficult conditions, while others have demonstrated greater resilience through a stronger mix of infrastructure, maintenance and repair activity.”

The BMF provides its members with a quarterly forecast as well as producing the Builders Merchants Building Index (BMBI) which evaluates building materials sales on a monthly basis and is considered to be a key bellwether for the national economic picture.

The BMF represents 1,020 member businesses with combined sales of £52 billion pounds and employing almost 209,000 staff.

John Newcomb added: “Construction remains one of the most vulnerable areas of the economy, with elevated levels of business distress and insolvencies highlighting the challenges facing many firms.

“Recent activity indicators point to an industry that continues to struggle to gain momentum, with sluggish demand across several key product categories, particularly those linked to new housing activity where the rising cost of materials is outpacing UK inflation.

“Trading conditions are expected to be difficult in the short term, but optimism for a gradual recovery remains, with potential growth of +1.7% anticipated for 2027.”