Economy being held back by a collapse in construction activity – our reaction to the latest UK GDP figures

Economy being held back by a collapse in construction activity – our reaction to the latest UK GDP figures

Growth Commission member Douglas McWilliams has issued the following response to the GDP figures for January 2026 that have been issued this morning:

“The latest GDP data shows some growth – of 0.2% in the three months to January – but hints at longer term weakness. The growth reflects a bounceback in production of vehicles (up 17.5% in the recent three months) as the sector recovers from the JLR shutdown and the impact of regulation on sales of EVs.

“But the economy is being held back by a collapse in construction activity, hampered by planning regulations, anti-landlord legislation and overly-draconian safety rules – with the volume of new construction work having fallen by 7% since 2023.

“Recent developments in the Middle East will obviously put the recovery at risk, at least in the short term. Longer term, keeping the economy growing will require pro-growth policies such as those The Growth Commission highlighted prior to the Chancellor’s Spring Statement.

“There are two particular areas which are crying out for a change in policy right now: firstly, reversing the anti-building and anti-landlord laws that are causing that sharp fall in construction activity; and secondly, ending the energy profits levy which would encourage oil and gas producers to make best use of existing fields in the North Sea, reducing the country’s dependence on imported energy.”

Ahead of Rachel Reeves’ Spring Statement earlier this month, The Growth Commission published a briefing paper, Policies to sustain the cyclical recovery, with a raft of policy proposals to boost the prospects of economic growth, including:

  • Bringing central government spending under control
  • Revising employment rights to create a fair balance between employer and employee
  • Freeing up planning and housing regulation to get developers building and landlords investing
  • Making energy cheaper and more abundant and allowing development of oil and gas in the UK
  • Financing higher education in such a way that it does not discourage graduates from getting productive jobs
  • Reforming the tax system so that it limits the penalties paid for success and encourages the young and talented to stay in the UK
  • Avoiding anti-growth own goals in the regulatory sphere such as aligning with EU regulations

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