Ukraine is preparing for the possibility that its war with Russia will continue through another winter after talks in Kyiv with US envoys Steve Witkoff and Jared Kushner ended without an announced peace breakthrough. For UK construction, the timing matters. Turner & Townsend is already forecasting 3.5% tender price inflation for UK real estate and 5.0% for infrastructure in 2027. Those increases are not forecasts of the direct cost of the Ukraine war, but another winter of geopolitical instability adds to an already volatile energy, materials and logistics outlook.
The distinction is important. Europe is not currently facing a repeat of the physical gas-supply emergency seen in 2022. The European Commission said on 3 September that there was no immediate security-of-supply risk despite lower gas storage levels, pointing to greater LNG import capacity, more diversified supply and lower demand. The bigger construction risk heading towards winter is price volatility. LCM's latest analysis of UK diesel and construction costs found average road diesel at 183.49p per litre, illustrating how quickly geopolitical disruption can feed into plant, haulage and site logistics even without a domestic fuel-duty increase.
Construction works at 75 London Wall in the City of London. Original Photo: London Construction Magazine.
No Peace Breakthrough Before Winter
Witkoff and Kushner travelled to Kyiv after holding three hours of talks with Russian President Vladimir Putin in Moscow. The US envoys described the subsequent discussions with President Volodymyr Zelensky as substantive and said they hoped further US-mediated negotiations could follow. No settlement was announced. Zelensky said Ukraine was discussing air-defence capability and energy support for the coming winter, when Russian attacks on Ukrainian power infrastructure are again expected to be a major concern.
That keeps one source of European geopolitical uncertainty unresolved, but it would be misleading to attribute today's entire energy-price problem to the Russia-Ukraine war. The International Energy Agency says the more immediate 2026 shock to global gas markets has come from the Middle East conflict and disruption to LNG flows through the Strait of Hormuz. European TTF gas prices averaged around 32% higher year-on-year in the second quarter of 2026, according to the IEA, while damage and disruption to Gulf LNG infrastructure is expected to keep global gas markets tighter than previously forecast into 2027.
UK Tender Prices Already Point Higher in 2027
The current construction forecasts therefore need to be read as a baseline before any additional winter shock.
| 2027 Indicator | Forecast | What It Measures |
| UK real estate | +3.5% | Turner & Townsend tender price inflation |
| UK infrastructure | +5.0% | Turner & Townsend tender price inflation |
| European Union | +2.8% | Turner & Townsend average construction cost inflation |
| UK All Work material index | +6.0% | Latest annual material-price movement to June 2026 |
Turner & Townsend's figures also show why there is no sensible single "UK construction inflation rate". Infrastructure is forecast to run materially hotter than real estate as investment competes for skilled labour, civil engineering capacity and key materials.
Arcadis has separately widened the upper ranges of its 2026 and 2027 forecasts by one percentage point to allow for potential inflation arising from continued Gulf energy disruption. That is an upside-risk allowance, not an additional one percentage point that should automatically be added to every project tender.
Steel Is Rising, But Not Every Material Is
Official UK material data already shows how uneven the market has become. The government's All Work construction material price index was 6.0% higher year-on-year in June 2026, but individual materials moved in very different directions. Fabricated structural steel increased 17.7%, rigid pipes and fittings rose 12.0% and the aggregates-related index increased 11.4%. Yet ready-mixed concrete fell 1.1% and cement was 4.5% cheaper than a year earlier.
LCM examined that split in detail in its UK construction material prices 2026 analysis. The evidence does not support claims that another winter of war will automatically push every construction product higher. Steel, concrete, MEP equipment, glass, insulation and fuel each have different energy exposure, manufacturing routes, trade pressures and procurement cycles.
LCM Analysis: This Is Not Another 2022, Yet
For contractors and developers, the useful distinction is between physical energy security and construction price risk. Europe has substantially more LNG import capacity and more diversified gas supply than it had when Russian pipeline deliveries collapsed earlier in the decade. The European Commission currently believes the system is sufficiently resilient to manage the coming winter despite lower storage.
That does not make prices predictable. European industry remains exposed to global LNG competition, weather, electricity demand and geopolitical disruption. Construction then receives those shocks indirectly through manufacturing energy, transport, fuel surcharges and supplier risk allowances. The Ukraine war therefore matters, but it now sits alongside other cost drivers rather than explaining them on its own. The Middle East energy crisis, trade measures, labour shortages, project demand and capacity constraints are all feeding into 2027 pricing.
What Contractors Should Watch Through Winter
The most exposed projects will not necessarily be those with the highest headline construction value. Projects entering tender or major package procurement during winter are more sensitive to short-term changes in energy-intensive materials, fuel, specialist capacity and supplier appetite than schemes where packages have already been secured.
Infrastructure carries the higher central 2027 tender-price forecast at 5%, while real estate is currently at 3.5%. London projects competing for specialist MEP, façade, structural and logistics capacity may move differently again depending on procurement route and timing. That reinforces the broader picture identified in LCM's London construction market outlook for 2027: a substantial forward pipeline does not mean uniform pricing or uniform delivery conditions. Projects still have to move from funding and planning through procurement, award, mobilisation and physical construction before that pipeline becomes real workload.
The next test will be whether diplomacy produces a meaningful reduction in the Ukraine conflict before winter and whether Middle East LNG production and trade flows continue to recover. If both stabilise, the current 2027 tender forecasts may remain achievable. If energy markets deteriorate again, contractors and clients should expect pressure to appear first in fuel, logistics and energy-intensive packages rather than as one uniform percentage added across every construction project.
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Expert Verification & Authorship: Mihai Chelmus
Founder, London Construction Magazine | Construction Testing & Investigation Specialist |
