Budget blowback: will tax hikes stall Britain’s building boom?
Posted by: electime 20th November 2025
Industry voices warn that looming tax rises in the Autumn Budget are piling pressure on material costs, supply chains, and builder confidence.
With the Autumn Budget 2025 fast approaching on 26th November, the UK construction supply chain is entering a phase of heightened uncertainty as concerns of potential tax hikes could choke off growth just as confidence begins to return.
According to the Construction Products Association (CPA), output growth for the construction sector has been revised sharply downward amid concerns over tax rises and weaker demand.
Terry Paterson, Commercial Director for EPD, an aftermarket parts and components seller for construction, agricultural, and industrial machinery has shared how this environment is shaping material costs, customer behaviour and what support the sector now needs.
Material costs and supply chain pressures
“Our sector is already dealing with high input prices, rising energy and transport costs, and ongoing supply-chain disruption, If tax rises go ahead, those pressures will compound: margins will shrink, material orders may be delayed or cancelled, and that will feed upstream into manufacturing and suppliers.”
The CPA has flagged that total construction output is now forecast to grow by just 1.1 per cent in 2025 and 2.8 per cent in 2026, down from earlier projections of 1.9 per cent and 3.7 per cent.
In private housing, which is the largest sector of construction, output is forecast to rise by 2.0 per cent in 2025 and 4.0 per cent in 2026, a sharp downgrade from previous forecasts of 4.0 per cent and 7.0 per cent, reflecting weak demand and affordability constraints.
Customer Sentiment
UK construction activity slumped in October, posting its sharpest decline in more than five years and marking the longest continuous downturn since the global financial crisis. The S&P Global UK Construction PMI fell to 44.1 from 46.2 in September, its tenth straight month below the 50.0 threshold.
Terry at EPD, adds: “Our customers are telling us that business is stagnant, and in some cases down by 20 per cent. If taxes go up, this already weak situation could collapse further. The recent noise of ‘housing bouncing back’ is overshadowed by ever frequent stalls on orders in this space.”
What kind of support or clarity would help now?
“In this environment of uncertainty, we believe two things are especially important,” says Terry.
- Clear signalling of tax policy – clear notification of which taxes will rise and by how much, so suppliers and contractors can budget and plan.
- Supply-chain resilience support – including support for UK manufacturing of construction products, funding for skills and capacity, and measures to ease logistics and procurement pressures.
Terry concludes: “The Autumn Budget is a pivotal moment for our industry. We understand the need for financial discipline, but if the government introduces policies that make houses more expensive or discourage buyers, it could derail the fragile recovery in homebuilding. We’re committed to supporting builders through uncertainty by ensuring reliable access to parts and components, helping maintain project timelines and cost control. What we need now is clarity and targeted support from government to keep Britain building.”
