CEA publishes latest economic briefing for members
Wednesday, 24th June: The CEA (Construction Equipment Association) has today published its June 2025 economic update—a summary designed to help construction equipment manufacturers understand how current economic trends, government policy, and energy pricing are likely to impact their business over the coming months. The CEA summary also captures key elements from this week’s UK Industrial Strategy.
Drawing on the Government’s Spending Review, the latest ONS data and wider macroeconomic factors, the report focuses on developments most relevant to UK manufacturers, including key indicators such as construction output, inflation, employment, and ongoing energy price pressures. The update has been produced to complement the CEA’s Market Insight Service and help members make informed decisions in a complex and changing environment.
“We know how important it is for our members to have access to clear, practical information about the economic forces affecting their businesses,” said Viki Bell, Chief Executive of the CEA. “This summary brings together the latest data, puts it into context, and offers a view of the road ahead. I hope it’s a useful resource — and we’d welcome feedback on whether you’d like to see more of these briefings.” Viki Bell, Chief Executive, CEA
The publication comes at a crucial time, with the Infrastructure Plan and long-awaited Industrial Strategy both due to be released in the coming weeks. The CEA plans to follow up with a further update once those documents are available.
Key insights from the June update:
Spending Review 2025: increased investment, but tighter scrutiny
The Government has pledged further investment in core public services, including an extra £10 billion for NHS digital upgrades and £4 billion for adult social care. Local government funding is expected to rise to £79.3 billion by 2028–29, and defence spending is projected to reach 2.6% of GDP by 2027. A headline commitment to deliver 1.5 million new homes has been set, along with £20 billion for low-carbon energy and transport. However, the bar for capital project approval is being raised, with more emphasis on private sector co-investment.
The Government has pledged further investment in core public services, including an extra £10 billion for NHS digital upgrades and £4 billion for adult social care. Local government funding is expected to rise to £79.3 billion by 2028–29, and defence spending is projected to reach 2.6% of GDP by 2027. A headline commitment to deliver 1.5 million new homes has been set, along with £20 billion for low-carbon energy and transport. However, the bar for capital project approval is being raised, with more emphasis on private sector co-investment.
Construction performance: resilient despite wider economic contraction
Although the UK economy shrank by 0.3% in April 2025, construction output rose by 0.9%, reflecting the sector’s continued resilience. Inflation has eased to 1.7%, and real wages are improving, but labour market data paints a more mixed picture. Unemployment rose to 4.6%, and payrolled employment fell by 55,000 over the month.
Although the UK economy shrank by 0.3% in April 2025, construction output rose by 0.9%, reflecting the sector’s continued resilience. Inflation has eased to 1.7%, and real wages are improving, but labour market data paints a more mixed picture. Unemployment rose to 4.6%, and payrolled employment fell by 55,000 over the month.
Energy pricing pressures: a major competitiveness issue
The report highlights that industrial electricity prices in the UK remain around 46% above the IEA median. A combination of market structure, gas dependency and slower investment in renewables drives the gap. While wholesale prices dipped slightly earlier this year, the cost burden on UK manufacturers remains significant. The Government is exploring reforms, including a two-way Contract for Difference model, but no quick fixes are expected.
The report highlights that industrial electricity prices in the UK remain around 46% above the IEA median. A combination of market structure, gas dependency and slower investment in renewables drives the gap. While wholesale prices dipped slightly earlier this year, the cost burden on UK manufacturers remains significant. The Government is exploring reforms, including a two-way Contract for Difference model, but no quick fixes are expected.
What this means for UK construction equipment manufacturers
The overall picture is mixed. There are positives: public investment in housing, green energy and infrastructure could drive future equipment demand. Policy trends also align with the sector’s strengths — including digital site delivery and Modern Methods of Construction.
The overall picture is mixed. There are positives: public investment in housing, green energy and infrastructure could drive future equipment demand. Policy trends also align with the sector’s strengths — including digital site delivery and Modern Methods of Construction.
However, challenges persist. High energy prices are making UK manufacturing less competitive, and ongoing uncertainty around capital project approvals could slow order pipelines. A skills shortage in green and advanced machinery operation also continues to hold back potential growth.
Viki concluded: “We aim to provide useful, relevant insight that helps our members plan with greater confidence. We know that many businesses are dealing with uncertainty on multiple fronts — from energy costs to investment decisions — and we’ll continue to monitor developments closely and share updates as they emerge.”
