Edinburgh,July 4, 2026:Scotland’s construction industry closed 2025 in a position many sectors would envy: workloads still expanding, order books still relatively full, and builders more optimistic than pessimistic about the year ahead.
Yet beneath that headline resilience, the latest State of Trade Survey from the Federation of Master Builders (FMB) and the Chartered Institute of Building (CIOB) describes an industry running increasingly short of the one resource it cannot import quickly enough: skilled people.
The biannual survey, which tracks the health of small and medium-sized building firms across the UK, found that Scottish workloads held at a net balance of +28% in the second half of 2025 — a marginal step down from +30% in H1, and still the second-strongest performance of any UK nation after Northern Ireland.
But that stability masks a far more fragile picture underneath, and one that will matter to anyone supplying, financing, or trading equipment into the Scottish and wider UK market.
Enquiries Cool Sharply Even as Workloads Hold
The most telling shift in the data is not in current workloads but in what comes next. New enquiries — the leading indicator of future work — collapsed to a net balance of +16% in H2 2025, down from +56% in the first half of the year.
A 40-point swing in six months is a rare and significant move for an indicator that typically shifts gradually, and it suggests Scottish builders are finishing out a strong pipeline of already-committed work rather than replenishing it at the same pace.
Scotland Construction Market Comparison: H1 vs H2 2025
| Indicator | H1 2025 | H2 2025 | Direction |
|---|---|---|---|
| Overall Workload (Net Balance) | +30% | +28% | Marginal decline |
| New Enquiries (Net Balance) | +56% | +16% | Sharp decline |
| Firms Affected by Skilled-Trade Shortages | 61% | 72% | Worsening |
| Firms Reporting Rising Material Costs | N/A | 75% | Elevated |
| Positive Outlook for Following Half-Year | 53% | 48% | Softening |
Source: FMB–CIOB State of Trade Survey, H2 2025 release; CCE News comparative analysis.
A Skills Shortage That Has Moved Past ‘Tight’ Into ‘Structural’
Seventy-two percent of Scottish firms said a lack of skilled tradespeople had directly affected their business in H2 2025, up sharply from 61% just six months earlier.
The consequences are concrete rather than abstract: 49% of firms reported job delays traced directly to workforce gaps, and 22% said projects had been cancelled outright.
Three in ten firms said the shortage had forced them to shelve expansion plans altogether — turning a recruitment problem into a growth-ceiling problem for an industry that Scotland is relying on to help close a housing shortfall estimated at 100,000 homes.
Hardest Trades to Recruit in Scotland, H2 2025
- Carpenters — 30% of firms report difficulty hiring
- Bricklayers — 29%
- Plumbers & HVAC Trades — 23%
- Workers Skilled in Sustainable Building Practices — 57% struggled to recruit
- Workers Versed in New Construction Technologies — 58% struggled to recruit
- Conservation & Heritage Specialists — 58% struggled to recruit
- Staff Familiar with New Planning Requirements — 56% struggled to recruit
That last cluster of figures is arguably the more consequential one for the industry’s medium-term trajectory.
It is one thing to be short of bricklayers in a hot market; it is another to be structurally short of the people who understand retrofit, low-carbon materials, and modern planning frameworks — precisely the skills Scotland’s net-zero targets and heritage-heavy building stock demand.
A shortage concentrated in traditional trades is a capacity problem.
A shortage concentrated in emerging and technical skills is a competitiveness problem, and it tends to compound rather than resolve on its own.
Costs Are Rising Faster Than Firms Can Pass Them On
Three-quarters of Scottish firms (75%) reported rising material costs in H2 2025, while 57% faced wage increases — a combination that is squeezing margins from both directions.
Sixty-one percent of firms raised their own prices in response, but pricing power has clear limits: 51% of firms still reported lower-than-expected profits or outright losses, 34% restricted recruitment to protect their cost base, 20% said they feared for the ongoing viability of their business, and 16% had already made redundancies.
Expert Insight
“Scotland finished 2025 almost as strongly as it started, with a +28% net increase in workloads — second only to Northern Ireland. However, conversations I’m having daily with members reveal a more cautious outlook than these figures suggest. Enquiries dropped by 40 percentage points versus the first half of the year, and this survey was completed before the conflict in the Gulf began. We’re only starting to feel the economic impact, and material prices for steel and cement are likely to rise as the effects continue to bite.”
FMB Scotland Director
Delays, Late Payment, and a Policy Overhang
Operational friction is compounding the cost and labour pressures. Forty percent of firms cited extreme weather or climate-related disruption as a cause of project delay in H2 2025, 36% pointed to planning delays, 35% to broader market uncertainty, and 31% to delays sourcing materials or equipment.
Payment discipline across the supply chain remains a persistent irritant rather than a crisis: only 57% of Scottish builders said invoices were paid within agreed terms, and 13% said late payment was a recurring problem.
Policy uncertainty adds a further layer. Close to half of firms — 47% — expect changes to employer National Insurance contributions to weigh on the sector, and 46% expect the UK government’s recent budget to have a negative effect on construction activity specifically.
None of this has yet tipped sentiment negative: 48% of Scottish builders remain positive about the first half of 2026, against just 8% who are negative and 38% sitting neutral.
But the gap between resilient sentiment and deteriorating input metrics — enquiries, cost pressure, workforce availability — is precisely the kind of divergence that tends to catch up with an industry a few quarters later.
The Apprenticeship Funding Gap Behind the Numbers
The survey’s workforce findings sit inside a wider funding story that has been building in Scotland for several years.
The Construction Industry Training Board (CITB) estimates Scotland will need roughly 3,590 additional construction workers every year through 2029 simply to keep pace with demand, yet FMB Scotland has been flagging for some time that apprenticeship funding has not kept up with either that demand or with rising employment costs.
The minimum wage for 16- and 17-year-olds and apprentices has risen 66% since March 2023, compressing the margin small firms have to absorb training costs, while grant rates for apprenticeships have remained largely static over a similar period.
That mismatch is now being sharpened by reform at the funding body itself: CITB began phasing in changes to its grants scheme from January 2026, refocusing support toward apprenticeships and a narrower list of qualifying courses while withdrawing funding from most short-duration training and scaling back support for Level 7 qualifications.
For SME builders — who train roughly seven in ten of Scotland’s construction apprentices — the combination of a shrinking grants pool and a widening skills gap leaves little room to manoeuvre without government intervention.
Expert Insight
“The next Scottish Government doesn’t have the power to resolve the Gulf conflict, but it does have the power to deliver a skills and training system that genuinely works for small building companies. Since March 2023, there’s been a 66% increase in the minimum wage for 16- and 17-year-olds and apprentices, yet apprenticeship funding remains stagnant. Quite frankly, there’s a limit on how much local building firms can absorb. With a shortfall of 100,000 homes and ambitious net zero targets, the work in Scotland is there. But if businesses aren’t willing and able to recruit and provide quality training for the next generation, the jobs won’t be created. We urgently need incentives and funding for construction skills and training, or we’ll exacerbate the skills crisis and undermine building quality and safety.”
FMB Scotland Director
What It Means for Contractors, Suppliers and Equipment Buyers
For plant, tool and materials suppliers watching the Scottish and wider UK market, the survey points to a market that will keep buying — but more selectively and with tighter margins to justify capital spend.
Firms squeezed between rising material costs and stagnant wage-adjusted output are more likely to prioritise equipment that reduces labour intensity per task: telehandlers and access platforms that cut crew sizes, semi-automated finishing tools, and off-site or modular components that shift skilled labour away from the constrained on-site trades listed above.
Nelson’s warning that steel and cement prices are likely to rise further as the Gulf conflict’s economic effects filter through also points to near-term input cost volatility that buyers and financiers should factor into 2026 procurement planning rather than treating H2 2025 pricing as a stable baseline.
The heritage and retrofit skills gap is a second signal worth watching: with 58% of firms struggling to find workers versed in conservation techniques and a similar share short of staff familiar with new planning requirements, demand is likely to grow for training partnerships, modular retrofit systems, and specialist subcontractors that can package these scarce skills for smaller general contractors who cannot justify carrying them in-house.
Outlook
Scotland’s construction sector enters 2026 with workloads still healthier than most of the UK, but with the two indicators that matter most for sustaining that position — new enquiries and workforce availability — both moving in the wrong direction.
FMB Scotland’s call for a construction-specific skills and training strategy is unlikely to be resolved quickly, particularly with CITB funding reform still being phased in through 2026 and a new Scottish Government yet to set out its own position.
Until the funding and training pipeline catches up with demand, the sector’s headline resilience will likely keep coexisting with the kind of delays, cancellations and margin pressure this survey describes.
Also Read
The State of Scottish Construction: Key Trends to Watch in 2026
The State of Plant Hire in Scotland: On the Road to ScotPlant 2026
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