2026 Perspectives and 2025 Review

Cavendish Industrials and Business Services Advisory

By Cavendish

2025 saw significant macroeconomic, geopolitical, and policy shifts. Together these factors were pivotal in reshaping the competitive landscape, driving growth opportunities in some areas, whilst acting as significant headwinds in others.

Nowhere was positive momentum more striking than in Defence, where defence-related equities regained structural portfolio status and contributed heavily to the broader sector’s outperformance, with national security seemingly once again a political priority.

For the Construction sector it was a year of two halves as corporates prepared for what had been anticipated to be improving market conditions in H1, only to see the second half of the year deliver protracted uncertainty in the build up to the UK Budget and stubborn inflation, despite being able to boast quality and long-tail orderbooks.

Across the sector, key themes remain supply chain resilience, automation, operational efficiency, process automation (including rapid advances in AI) and advanced manufacturing as businesses continued to seek to lower costs and lead times, whilst also enhancing differentiation through improved service and customisation capabilities.

Please view our 2025 Industrials and Business Services highlights here

2026 Outlook

We look ahead to 2026 with expectations of key trends including:

Supply chain resilience, automation and advanced manufacturing: Disruptions of the past few years will see the sector continue to heavily invest in advanced automation technologies, AI-driven predictive maintenance, and supply chain diversification – in doing so enhancing efficiency and reducing vulnerabilities to global disruptions. The industry will continue to embrace next-generation manufacturing technologies.
Defence modernisation and infrastructure renewal: Dual-use industrial infrastructure in defence modernisation and infrastructure renewal, including governmental infrastructure “mega-programmes” are expected to go hand-in-hand with greener, more efficient base-infrastructure, and continued progress in Modern Methods of Construction (MMC).
Decentralised energy solutions: As the global push toward energy independence intensifies, industrial players will increasingly focus on decentralised energy solutions, such as microgrids and on-site energy generation.
Electricity infrastructure investment: Concurrently the five-year National Grid investment plan will now proceed following the funding plan announced in December 2025, supporting upgrades to on-grid energy generation and transmission projects.
Professional services: whilst budget threats around taxation of LLPs failed to materialise, we nonetheless see further opportunities for professional services on market, particularly those which can effectively pivot from traditional partnership structures and effectively harness AI, other regulatory drivers and more innovative business models to deliver growth.
Digital transformation and AI integration: Industry leaders are accelerating the integration of AI, IoT, and big data to optimize operations, enhance predictive analytics, and enable real-time decision-making – with a view to gaining advantages in operational agility and cost efficiency.
Construction materials: The market enters 2026 at a cyclical low point following 2025 budget uncertainty and delays in project approvals from the Building Safety Regulator. Potential stimulus in 2026 comes from interest rate policy and from the Planning and Infrastructure Bill which will come into force in January.
Integration of advanced technologies: As defence firms modernise, demand will grow for automation, advanced manufacturing, AI, and digital infrastructure — creating synergy with the wider sector’s push toward sustainability, automation, and advanced manufacturing. This convergence will in turn drive consolidation and M&A in defence and industrial supply chains – an area where advisory, financing, and strategic M&A can play a pivotal role.

As #1 adviser to public companies in the sector and cross-border M&A across 40 countries through Oaklins, Cavendish looks forward to supporting its clients in navigating developments and emerging opportunities across the sector in 2026.