BMF and CPA warn ministers that falling confidence and weak demand risk hollowing out construction supply chain capacity just as the UK needs to build more homes and infrastructure.
The Builders Merchants Federation and Construction Products Association have warned the government that weak demand and fragile confidence across construction could undermine the capacity needed to deliver new homes and infrastructure.
The warning was issued in a joint letter to Rt Hon Angela Rayner MP, Secretary of State for Housing, Communities and Local Government, from John Newcomb, CEO of the Builders Merchants Federation, and Peter Caplehorn, CEO of the Construction Products Association.
In the letter, the leading trade bodies said the construction supply chain is ready to support the government's ambitions for economic growth, housing and infrastructure, but warned that the sector is facing "an uphill struggle" unless weak demand and falling confidence are addressed.
The BMF and CPA said their members, which span manufacturers, merchants, distributors and others across the construction products supply chain, are reporting a clear message that "the industry does not have a supply problem – it has a demand and confidence problem".
The latest Builders Merchant Building Index report, published in July, showed May 2026 total like-for-like value sales were broadly flat year-on-year, down 0.1%, but like-for-like volumes fell 5.8%. With one fewer trading day, unadjusted value sales were down 5.1%, volumes fell 10.5% and prices rose 6.1%.
The market pressure has been reinforced by the CPA's Summer Forecasts, which downgraded its outlook for UK construction output. The CPA expects total construction activity to fall by 3.3% in 2026, with private housing output forecast to decline by 10%.
The organisations warned that the slowdown is not confined to housebuilding. Major contractors are reporting that projects are taking longer to reach site, with extended pre-construction periods delaying work through the supply chain and making it harder for manufacturers, merchants and contractors to plan and invest.
The letter also highlighted continuing cost pressures, including higher energy and transport costs, increased employment costs and squeezed margins at a time when activity is falling.
According to the BMF and CPA, prolonged weak demand could lead companies to review investment plans, freeze recruitment and reassess production capacity. They warned that once manufacturing capacity is taken out of service, bringing it back when demand returns can be considerably more difficult.
They called on government to focus on three immediate priorities: accelerating housing delivery across all tenures; accelerating committed infrastructure and public sector projects; and giving businesses greater certainty over the long-term pipeline of work.
The letter stated: "The construction industry has the products, skills, manufacturing capacity and expertise needed to deliver the homes, schools, hospitals, infrastructure and energy projects the country requires. Our shared challenge is to ensure that these capabilities are retained and strengthened during this period of subdued demand, so they are ready to respond when activity accelerates."
