Builders’ merchants outlook: BMF forecast downgrades and what it means for projects
Reviewed by Tom Sullivan
First reported on The Construction Index
30 Second Briefing
Builders’ merchants face a prolonged flat market as the Builders Merchants Federation cuts its 2025 sales growth forecast from 2.5% to 1.4% and trims 2026 expectations from 3.1% to 2.3% after a weak Q3 2025. The BMF Winter Forecast Report now brackets 2026 growth between 1.2% and 3.7%, with the upper bound dependent on government stimulus for house-building and domestic repair and maintenance. Chief executive John Newcomb points to stalled housing starts, depressed RMI demand and high interest rates, calling for rate cuts, first-time buyer incentives, brownfield release and delivery of the Social and Affordable Housing Programme.
Technical Brief
- Q3 2025 was expected to deliver a turnaround in sales but the uptick failed to materialise.
- Housebuilders slowed new starts ahead of the autumn budget, deferring demand for core structural materials.
- Housing RMI and new-build housing are identified as the two dominant demand drivers for merchants’ volumes.
- BMF attributes weaker volumes directly to falling consumer confidence rather than supply-side or logistics constraints.
- Bank of England action on materially lower interest rates is seen as the primary 2026 unlock.
- Policy levers named include first-time buyer incentives and accelerated delivery of the Social and Affordable Housing Programme.
- Additional demand could be released by freeing up brownfield land, affecting groundworks, remediation and enabling-works packages.
- Warm Homes Plan and Future Homes Standard are flagged as latent regulatory drivers for insulation and building fabric products.
Our Take
With the Builders Merchants Federation revising UK materials growth for 2025–26 down to the 1.4–2.3% range, contractors and civils suppliers should expect tender pricing pressure to remain intense, as there is little volume growth to absorb fixed overheads in distribution and logistics.
The Bank of England’s role in this narrative is mainly via the interest-rate channel: in our infrastructure coverage, UK schemes dependent on private housing or commercial development have been the most rate‑sensitive, so a ‘no blue sky’ outlook from merchants signals continued risk of delayed or value‑engineered building packages into 2026.
Across the 388 Infrastructure stories in our database, UK‑focused pieces that flag sub‑3% annual growth expectations typically coincide with reports of contractors stretching payment terms, which is a warning sign for merchants’ working‑capital exposure over the next 18–24 months.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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