The warnings come as the Construction Leadership Council’s (CLC) material supply chain group spelled out the knock-on effects for the UK construction industry from the Middle Eastern conflict.

In a statement released yesterday, the body said steel availability and pricing stood out as the most significant risks ,with costs ‘changing so rapidly some companies are struggling to obtain reliable quotes’.

It added that there were major challenges for ‘products with energy-intensive manufacturing processes’ due to the rapid rise in energy prices and their immediate impact on material costs. The council also said shipping costs for goods imported from the Far East had risen considerably, with containers being rerouted around the Cape, leading to price increases in some products of 20 to 100 per cent’.

Alex Shall, a partner at accounting and advisory firm Praxis (see full comment below), told the AJ: ‘The last four years have been incredibly tough on practices, due to well-known issues of cost inflation, uncertainty over workloads and lack of demand in multiple sectors.

‘Unless the Middle East war is ended quickly, which is looking unlikely, 2026 has all the hallmarks of another financial crisis for architects.’

Before the USA began its air strikes on Iran on 28 February, practices had been reporting an increase in confidence, according to the RIBA’s monthly Future Trends bellwether survey. Adrian Malleson, RIBA head of economic research and analysis, said: ‘February’s Future Trends results appear encouraging, with workloads rising and confidence improving following a difficult second half of 2025.

‘For the first time since summer 2022, practices report that workloads are higher than a year ago.’

But the RIBA admitted the survey data had been collected before the escalation of hostilities in the Middle East, which ‘introduces significant economic uncertainty that may affect construction demand and architectural workloads in the coming months’.

Bradley Lay, co-founder of Peak Capital Group and advisor in the wider construction sector, believes the current geopolitical situation could become ‘one of the most significant external shocks’ the industry has faced in recent years.

He said: ‘The UK construction sector has already been through a sustained period of pressure following Brexit, Covid and regulatory disruption through the Building Safety Regulator process. Many business owners felt that 2026 would finally bring some stability.

‘Unfortunately, the reality is quite the opposite. The Iran conflict is introducing another layer of volatility that could push already stretched businesses beyond breaking point.’

Pressures from the conflict come as a new report from global professional services company Turner & Townsend revealed that the cost to build a skyscraper in London had increased by up to 40 per cent since 2020 – ‘one of the steepest increases’ of any cities in the world, exceeding Seoul by more than three times and Mumbai by 10 times.

Stephen Drew, founder of online careers platform Architecture Social, said while the Iran conflict was ‘creating real uncertainty, particularly for practices exposed to the Middle East’, the recruitment situation was more nuanced.

He told the AJ: ‘Domestically, we are seeing genuine hiring activity in data centres, healthcare, education, retrofit and large-scale residential. These sectors are not slowing down as much as others.’

Drew went on: ‘The profession has begun to split. Practices that diversified and kept their cost base lean through the last four years are now in a position to grow. Practices that were over-reliant on a single sector or a single region face a tougher road.

‘The biggest risk is not the conflict itself but the knock-on effect on interest rates and development viability. If rates stay frozen at 3.75 per cent into 2027, that will squeeze scheme viability more than energy prices will.’

He concluded: ‘But architects have been through this before. The practices that survived 2008 and the pandemic know how to manage cashflow, hold their nerve and come out the other side stronger. Every downturn creates opportunity for the bold. Practices that invest in AI tools and their people right now will be the ones winning work when the recovery comes.’

Comment

Alex Shall, partner at accounting and advisory firm Praxis

Firstly, I have a great deal of sympathy for all practices who have weathered the post-pandemic period. The last four years have been incredibly tough on practices due to well-known issues of cost-inflation, uncertainty over workloads and a lack of demand in multiple sectors.

In my firm’s experience, practices have either focused on international expansion, particularly in the Middle East, or they have accepted retrenchment by reducing employee numbers, cutting discretionary spending to the minimum, seconding underutilised staff to other practices and delaying investment in technology.

For those that took the retrenchment approach, 2025 may be seemed like a corner had been turned. Most clients reported an increase in new business enquiries, fee income more in line with reduced headcount, and a welcome reduction in cost inflation. A number of clients have started hiring again and have been able to bring technology and studio investment plans off hold.

Unless the Middle East war is ended quickly, which is looking unlikely, 2026 has all the hallmarks of another financial crisis for architects. Local elections in May mean that purdah will shortly begin. Inflation is predicted to increase which will put pressure on practices to increase salaries.

Energy price increases are expected to lead to both a general reduction in global economic growth and an increase in input costs for all manner of construction materials and services.  Bank of England base rate reductions are now looking less likely which will in turn impact the financial viability of some schemes.

Practices that successfully navigated the last four years know what they need to do – careful monitoring of cashflow, rigid credit control practices, delaying or deferring investment to preserve cash reserve levels of at least 3-4 months’ worth of expenditure and monthly re-forecasting of forward fee income considering best/mid/worst cases. Levers that practices can pull include seconding staff to other practices, talking to staff about reduced hours and asking creditors (including HM Revenue & Customs) for payment plans if needed.

For clients working extensively in the Middle East my advice would depend on whether they have staff on the ground or not. If they are running that work from the UK then they face the same general challenges as all UK practices, except that they could also be faced with Middle eastern projects going on hold with little notice. Discussions with a few of our clients working in the UAE and Saudi Arabia suggest that at this early stage their clients are taking a business-as-usual approach, but this may not continue.

Where practices have staff working in the region, they have some much more difficult decisions to make for example whether they should be bringing seconded staff home, and whether there is additional assistance they should be offering employees based in the Middle east. I would strongly advise practices in this situation to take legal and HR advice if they have not already done so.