Scotland’s construction industry is gaining momentum in H1 2025, with workloads, enquiries and employment all rising. But homeowners may still encounter longer waits, higher prices, and even cancelled projects as firms struggle to recruit skilled tradespeople and manage cost pressures, 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 by a net balance of +30% in the first half of 2025. House building (+61%) and repair, maintenance and improvement (+65%) are driving growth, alongside strong gains in industrial and commercial activity (+25%). Enquiries are also up, with a net balance of +56%, and 65% of firms reported growing their workforce.
However, persistent skills shortages and escalating costs are clouding the picture.
Skills shortages continue to disrupt delivery
- 72% of firms said a lack of skilled tradespeople affected their work, leading to job delays (53%) and cancellations (40%).
- The hardest roles to recruit were roofers (51%), followed by carpenters/joiners (33%), plumbers and HVAC trades (33%), painters and decorators (33%), electricians (31%) and general labourers (30%).
- Beyond trades, recruitment challenges extend to specialist skills: 74% struggled to hire workers with knowledge of the new building safety regime, 67% with new technologies, and 66% with sustainable building practices.
Rising costs put pressure on SMEs
- 69% of firms have increased the prices they charge, while 72% report higher wages and 71% face higher material costs.
- These pressures are having serious impacts: among those reporting higher costs, 63% raised prices, 54% said profits were lower than expected or a loss was made, 52% reported risks to viability, and 47% restricted recruitment plans.
- Looking ahead to Q3, most firms expect costs to rise further, with net increases of +60% to +68% across wages, materials and prices charged.
Delays are widespread
- More than half of builders cited delays from materials or equipment shortages (55%) and changing project parameters (54%), while 46% experienced planning delays and 43% were held back by regulatory changes.
- Payment issues also create difficulties: while 49% said invoices are paid on time, 39% reported variable payment timeliness and 10% said invoices are often paid late.
Outlook steady but cautious
Despite the challenges, 53% of Scottish firms are positive about the outlook for the next two quarters, with the remainder neutral. No firms reported a negative outlook.
Gordon Nelson, Scotland Director for the FMB commented: “On the surface, the results from Scottish building companies in our state of trade survey for the first half of 2025 are very positive. Workload growth was up 30% for builders in Scotland: a robust result second only to our Celtic cousins in Northern Ireland. On enquiries for future work, with a net increase of 56%, there looks to be a healthy pipeline for builders in Scotland. On these two key indicators, you would expect the leaders of Scottish building companies to feel very confident about their prospects as we head into the autumn.”
Nelson continued: “However, severe labour and skills challenges persist. Builders are struggling to recruit and retain enough key tradespeople: especially carpenters and roofers. With stagnant apprenticeship funding and rising costs for employers, it is getting markedly tougher. From our state of trade survey 34% plan to restrict recruitment: to help control their costs and protect the viability of their business. It's clear that we in industry need to work closer with the Scottish Government and the college sector if we are to boost the recruitment and training of tradespeople.”
Notes to editors
- The FMB has conducted the State of Trade Survey for over 30 years. The refreshed 2025 edition now runs biannually with CIOB and is the only survey of its kind to focus exclusively on SME construction firms.
- The Q1–Q2 2025 survey received 458 responses, including 93 from Scotland.