Workloads remain robust across Scotland's construction sector, yet severe skills shortages and rising costs threaten to delay projects and restrict growth.
Scotland's construction industry maintained steady workloads in H2 2025, but the sector is grappling with an intensifying skills crisis and cost pressures that risk undermining growth, according to the latest State of Trade Survey from the Federation of Master Builders (FMB) and the Chartered Institute of Building (CIOB).
Overall workloads in Scotland increased in the second half of 2025, with a net balance of +28%, remaining strong despite a slight decline from +30% in H1 2025. However, enquiries fell significantly to +16%, down from +56% in the first half of the year, signalling potential headwinds ahead.
Scottish builders continue to report strong demand across repair, maintenance, improvement and house building sectors, but persistent challenges around recruitment, costs and project delays are putting pressure on SMEs, who form the backbone of Scotland's construction industry.
Skills crisis deepens
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72% of firms were affected by a lack of skilled tradespeople, up from 61% in H1 2025, leading to job delays (49%) and cancelled projects (22%).
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30% of firms said the skills shortage halted plans to expand their company.
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The hardest trades to recruit were carpenters (30%), bricklayers (29%) and plumbers/HVAC trades (23%).
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Specialist skills remain scarce: 57% of firms struggled to hire workers with sustainable building practices, and 58% with new technologies.
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58% of firms found it difficult to recruit staff with knowledge of conservation/heritage techniques, while 56% struggled to find workers with knowledge of new planning proposals.
Rising costs squeeze margins
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75% of firms reported rising material costs in H2 2025.
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57% experienced wage increases, while 61% raised the prices they charge to keep pace with costs.
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The impacts of cost pressures are severe: 51% reported lower-than-expected profits or losses, 34% restricted recruitment, 20% feared for business viability, and 16% made redundancies.
Delays and payment challenges compound pressure
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40% of firms said projects were delayed due to extreme weather or climate events, while 36% cited planning delays.
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35% pointed to market uncertainty as a cause of delays, and 31% to material or equipment delays.
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Only 57% of Scottish builders said invoices were paid within agreed terms, while 13% reported invoices are often paid late.
Outlook cautiously positive
Despite these pressures, Scottish builders remain more optimistic than pessimistic: 48% have a positive outlook for the first half of 2026, compared with 8% who are negative and 38% who are neutral.
However, concerns about policy changes are evident: 47% expect changes to National Insurance contributions to have a negative impact on the construction industry, and 46% expect the Chancellor's recent budget to negatively affect the sector.
Gordon Nelson, FMB Scotland Director commented: "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."
Nelson continued: "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."
