UK Mechanical & Electrical Sector Holds Firm

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30 September 2026

The mechanical & electrical (M&E) contracting market has shown impressive resilience in the face of challenging economic conditions, according to a new Top 30 UK M&E Contractors report¹ from the Building Engineering Services Association (BESA).

In the latest edition of its annual survey of the largest firms in the sector, the Association reports a collective turnover recovery from £4.7bn in the wake of the pandemic to over £6bn today.

The report, with financial research carried out by GHCS and GH Engage, shows that data centres and the wider digital infrastructure market along with healthcare, defence, energy transition and the push for compliance with building safety legislation are feeding into market growth. However, the fall in residential work has held back parts of the industry and led to the collapse of some highly respected and long-established firms.

Office construction and fit-out is providing a steady pipeline of work and new entrants into these markets are evidence of sector resilience. PFI ‘hand backs’ to the NHS estate are also creating a huge refurbishment and retrofit opportunity for the industry, according to BESA’s research.

Other significant factors emerge from the report such as the importance of investing in innovation and improving the efficiency of processes to keep up with the demands of clients in the digital, defence and healthcare markets. Many firms say they have moved on from the sector’s traditional “first past the post” approach to tenders and are improving efficiency in design and delivery.

However, several of the firms featured in the report said that protecting margins and cash flow continued to be challenging due to persistent inflation, coupled with fixed-price contracts and project delays, which increased risks and harmed profitability.

As a result, M&E contractors are now being more selective about the work they take on by focusing primarily on sectors offering more resilient, longer-term pipelines, such as mission-critical infrastructure and retrofit, and relationships with clients who engage them earlier in the design process. 

Several also highlighted the importance of proposed legislation to outlaw retentions and crack down on unfair payment practices as critical to protecting cash flow and reducing the risk of insolvency.

Gokhan Hassan, Managing Director of GHCS and GH Engage, said: “We have been in a state of flux for some years now. Since recovering from Covid in 2022/23 the collective turnover figure has risen from £4.7BN to more than £6bn which coincides with the explosion of the mission critical sector.”

Hassan added: “The future of the M&E sector is bright; the evolution of the Building Safety Act (BSA), intelligent buildings, resilient MEP infrastructure and environmental awareness will propel building services to contribute even further towards economic growth.”

David Frise, Chief Executive Officer at BESA, said: “This is an exciting time for our industry. There is great demand out there for high-quality building engineering work and the challenge of turning opportunity into business success is also driving companies to be more innovative.”

Frise continued: “M&E engineering is central to so many vital services and our companies are delivering more than 50% of the value of thousands of critical projects including digital infrastructure, healthcare, education and life sciences. This year’s report also shows there is even more potential out there for our companies’ expertise.”

Frise added: “Many engineering businesses are leveraging technology to become strategic partners to the sector’s clients rather than simply providing technical services.”

Frise highlighted: “Legislation could provide much needed relief to many of the SMEs in our sector and would be the culmination of decades of hard work by a generation of BESA members and staff. This is an important and exciting moment to be part of this crucial industry.”

Anna Shephard, BESA President-Elect, said: “The report also demonstrates the importance of focusing on apprenticeships and early talent, and making sure new entrants start off on the right path and develop the right behaviours.”

Shephard added: “Legislation has increased the focus on clear roles, good record keeping and being able to show how safety is managed throughout a project. We focus on three things: competence, compliance, and accountability, which helps build trust and ensures safety is at the centre of every project.” 

1. Top 30 UK M&E Contractors report from the Building Engineering Services Association – see here.

Picture: An image of a page extract from the new Top 30 UK M&E Contractors report from the Building Engineering Services Association.

Article written by Dave Mapps | Published 30 September 2026

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