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Report from
Europe
No schedule yet for UK anti-deforestation regulation
The UK government says it remains committed to
combating global forest loss. However, it has still not set
a timeframe for implementation of the UK Forest Risk
Commodities Regulations (UKFRCR), which are aimed
at shrinking the country’s ‘tropical deforestation
footprint’.
Companies which will be affected by the UKFRCR say
the delay in finalising necessary secondary implementing
legislation is leaving them ‘in limbo’. Without the
regulations in place, leading retailers and other businesses
fear there will be greater risk of trade issues with the EU
as and when the EU Deforestation Regulation (EUDR) is
implemented.
To facilitate trade, they also want the requirements of the
UKFRCR, which will be finalised in enacting legislation,
to be as close as possible with those of the EUDR.
Timber and wood products are not among the
commodities covered by the UKFRCR. They are dealt
with separately by the UK Timber Regulation (UKTR).
This stipulates that operators placing timber and wood
products on the UK market undertake due diligence to
ensure they are harvested and produced legally in the
country of origin. Some in the timber trade, however,
favour bringing timber under the remit of the UKFRCR
regulations. They say this would streamline UK anti-
deforestation rules and ensure they more closely mirror
the EUDR. It would also counter any misconception that
the timber sector is a particular deforestation risk requiring
its own special rules.
The UKFRCR regime was introduced in 2023 in Schedule
17 of the UK Environment Act. It was described by the
then Conservative government, as designed to tackle
illegal deforestation in UK supply chains’.
“This is a flagship measure to deliver on the commitment
made by the UK and over 140 other countries at COP26 in
Glasgow to halt and reverse deforestation by 2030,” said
the then Conservative Secretary of State for Environment,
Food and Rural Affairs (DEFRA) Steve Barclay.
“The legislation will help protect precious tropical forests
at risk of illegal clearance. This will help us to support
producer country efforts to enforce their laws to stop
illegal clearance and protect vital forest habitat for
endangered wildlife.”
Regulated businesses are subject to three core
requirements under the Environment Act :
They are prohibited from using forest risk
commodities produced on land illegally occupied
or used
They must implement a due diligence system for
each regulated commodity
And they must report annually on their due
diligence exercise.
The UKFRCR set out in Schedule 17 of the Act
effectively ‘operationalise’ these requirements. They
apply to four commodities identified by Defra as key
drivers of deforestation: cocoa, palm oil, soy and cattle
products excluding dairy.
“These are estimated to account for 64% of the UK’s
tropical deforestation footprint,” said Secretary of State
Barclay. “And as much of 93% of this deforestation is
likely to be in violation of local laws.”
In the UKFRCR frequently asked questions section of its
website, the UK Agricultural Industries Confederation
(AIC) website states that all products derived from the
four in scope commodities will also be regulated. That
includes those considered ‘waste’ or ‘by-products’, such
as soy hulls, palm kernel expeller and bovine hides. Dairy
products will also be covered if derived from animals fed a
diet containing forest risk commodities.
The UKFRCR apply to businesses engaged in commercial
activity involving the specified commodities with a global
annual turnover over £50 million. But companies using
under 500 tonnes per year may submit an exemption.
In scope companies must undertake due diligence to
ensure that commodities are legally produced/sourced in
the country of origin. That means commodities can
originate from legally deforested land, which is a point of
difference with the EUDR.
The latter stipulates that goods it covers (timber, cocoa,
coffee, palm oil, soya, rubber, beef/cattle) cannot be
placed on the EU market if derived from land either
illegally deforested or legally deforested after December
31, 2020.
The so-called ‘laying date’ for the UKFRCR enacting
legislation was expected to be May 2024. However, the
draft legislation had not successfully passed through
parliament before the announcement of the July 2024
General Election, which was won by the current Labour
Government.
The latter has affirmed the UK's commitment to the COP
26 Glasgow Leaders' Declaration on Forests and Land
Use, pledging to end deforestation and land degradation
by 2030. But the AIC says it ‘has given little indication as
to when it might find the necessary Parliamentary time to
pass the legislation into law’.
In March 2025, Defra and the government’s International
Climate Fund launched a survey to enhance their
understanding of supply chain management of
commodities including timber, soy, palm, rubber leather
beef, cocoa and coffee. Defra described this as an
information gathering exercise but made no link between
it and the UKFRCR.
In July 2025, an open letter was signed by leading
retailers, including Aldi, Marks & Spencer, Sainsbury’s,
Tesco, Morrisons and Waitrose & Partners, requesting
swift introduction of UKFRCR enacting legislation to
minimise ‘trade friction’ with the EU when the EUDR is
implemented.
It now looks likely that the EUDR will be pushed back a
further year following a vote in favour of this in the
European Parliament on November 26, 2025. However, at
the time of the UK retailers’ letter it was still on track for
introduction at the end of 2025.
“In less than six months, British companies will need to
have the information and support necessary to continue
exporting regulated forest-risk products [to the EU], or our
European customers will source from other nations,” the
open letter states.
“The lack of clarity from the government of how supply
chains and operations in Northern Ireland [which remains
in the EU single market] will be affected is further
complicating and delaying our ability to act.”
The retailers also urged that in their final form the
UKFRCR should be ‘aligned as much as possible’ with the
EUDR in scope, requirements and definitions to ease trade
with the EU.
Further, they want EUDR due diligence statements to be
recognised as evidence of UKFRCR compliance to
minimise burdens on businesses.
Despite this lobbying, Defra says it will not seek to fully
align the UKFRCR with the EUDR. Not has it set a
deadline for implementation. Asked directly early
November 2025 when they will come into force, Defra
responded: ‘We recognise the need to take action to ensure
that UK consumption of forest risk commodities is not
driving deforestation. The Government is currently
considering its approach to addressing the impact of the
use of forest risk commodities in our supply chains and
will set out its approach in due course’.
David Hopkins, CEO of the country’s leading timber trade
body Timber Development UK, said that despite Defra’s
comments on alignment of UK and EU regulations, the
UK government is likely to hold off finalising UKFRCR
enacting legislation until the final form of the EUDR is
decided. The final decision on EUDR postponement and
simplification is expected to be taken during the European
Parliament December 15-18 plenary session.
A representative of one leading UK timber trader and
distributor said some in the sector favour ultimately in
some way bundling the UK Timber Regulation with the
UKFRCR.
“Having a separate regulation for timber could reinforce
popular misconceptions that our sector is deeply
implicated in deforestation, when in reality conversion of
forest to agriculture is by far the main cause, especially in
tropical regions,” they said.
Having one UK regulation covering all forest risk
commodities, they said, would also mirror the EU
regulatory approach more closely.
Mr Hopkins felt there could be a case for this.“It’s got to
be done sensibly but given the volumes of timber and
wood products being driven back and forth between the
UK and EU and the Great Britain mainland and Northern
Ireland there are arguments for harmonising anti-
deforestation regulation in this way, rather than having
different rules for different forest commodities,” he said.
He added that TDUK had also discussed aligning its own
Responsible Purchasing Policy for members with the
EUDR.
“We’ll look at that next year and whether to make
adopting an EUDR-aligned policy a requirement for
members, or voluntary,” he said.
The AIC says it is working on a voluntary UKFRCR
aligned standard under its Sustainable Commodities
Scheme to help members demonstrate compliance.
It adds that there are still key unknowns with regards the
UKFRCR. For instance, there has been no announcement
on which competent authority will enforce them.
Also, while Defra has committed to providing
comprehensive guidance on the type and range of
evidence that in scope businesses will be expected to
provide in their annual compliance report, it is unclear if
this will be published at the same time the UKFRCR
enacting legislation is laid.
AIC says when the latter eventually happens, it will take at
least four months for the legislation to pass through
Parliament. DEFRA has also indicated it would consider a
grace period of at least six months before full UKFRCR
enforcement.
UKFRCR vs EUDR
While both the UKFRCR and EUDR aim to address
deforestation, there are notable differences:
See - https://questions-statements.parliament.uk/written-
statements/detail/2023-12-
12/hcws117#:~:text=It%20prohibits%20them%20from%20using
,on%20their%20due%20diligence%20exercise.
and
https://www.agindustries.org.uk/resource/uk-forest-risk-
commodity-regulation-ukfrc-and-eu-deforestation-regulation-
eudr-frequently-asked-questions.html
and
https://www.gaston-schul.com/en/resources/article/the-uk-forest-
risk-commodity-regulation/
and
https://www.legislation.gov.uk/ukpga/2021/30/schedule/17
UK construction forecasts revised down
Growth in UK building industry output in 2025 will be
less than previously projected. The government’s
November 26 Budget, setting out its tax and spend
policies, will also do little to drive the property market and
help achieve the government’s five-year target of building
1.5 million new homes.
This is according to the Autumn Forecasts and Budget
response statement from the UK Construction Products
Association (CPA), regarded as one of the leading
commentators and analysts of the country’s construction
market.
In its previous forecasts, the CPA predicted that total UK
building output would increase by 1.9% in 2025 and 3.7%
in 2026. It has now revised that down ‘significantly’ to
1.1% growth this year and 2.8% next.
“Firms across the construction supply chain are reporting
that activity has slowed since the Spring, particularly in
private housing, infrastructure, roads, and commercial new
build offices,” it said. “Confidence among homebuyers,
homeowners and investors is weak; this was exacerbated
by uncertainty over the Budget and who would bear the
brunt of the inevitable tax increases and potential spending
cuts.”
The largest sector of UK construction is private house
building which was worth £38.4 billion in 2024.
It reported a sound opening to 2025, with housing starts in
Q1 showing a double digit increase on the same period in
2024. Completions were a single digit higher. However,
sales rates have slowed since March.
The CPA says that, even in parts of the country where
demand and affordability have been sustained, house
builders’ ‘site viability has been affected by an increasing
list of additional costs imposed by government’. These
have hit smaller and medium-sized housebuilders in
particular. High-rise residential building has also been
held back by continued delays in gaining approvals from
the UK Building Safety Regulator.
Reductions in UK interest rates may gradually help
increase house demand. However, these cuts are now
likely to be slower than previously forecast and higher gilt
rates, due to concerns about government debt, may result
in interest rate cuts not being fully passed on in lower
mortgage rates.
The CPA consequently forecasts private housing output to
rise by 2% in 2025 and 4% in 2026, against its previous
forecasts of 4% and 7% respectively. Growth is forecast to
rise to 5% in 2027
The private housing, repair, maintenance and
improvement market (RMI), worth £37.1 billion in 2024,
has continued to be constrained by consumers’ preference
to save rather than spend, despite wage growth. More
intense than usual speculation in the media about how the
Budget might raise taxes reinforced this trend and the CPA
says the earliest a recovery can be expected is Spring 2026
earliest. It predicts private sector RMI output will be flat
for 2025 overall, with growth of 2% projected in 2026.
“Furthermore, risks to the sector remain on the downside,”
it says.
In the public housing arena, the government’s
confirmation of a £39 billion 10-year Social and
Affordable Homes Programme gives social housing
providers confidence for long-term planning, says the
CPA. However, the sector is currently facing higher
financing costs, plus elevated build costs and record low
market linked demand.
Public housing providers are also diverting spending in to
repair, and maintenance and fire safety and energy
improvement works required by new regulation. So, the
CPA expects public housing starts, completions and output
to fall this year by 2%, 4% and 4% respectively. It says, ‘it
is likely to be beyond 2026 until firmer growth rates
appear’.
Public sector housing RMI output is forecast to grow by
2% in 2025 and 2026, rising to 4% in 2027.
The commercial building sector is seeing projects delayed
due to economic uncertainty and weak business
confidence.
Higher construction and financing costs are also adversely
affecting projects, and the CPA forecasts output will
shrink 1.9% this year, before it returns to growth of 2.3%
in 2026 and 2.8% in 2027. Continued strong points in the
market include construction of data centres, life sciences
developments and student accommodation.
“UK construction has already lost more than 11,000
construction firms since the start of 2023 and given the
current low levels of house building and home
improvement, we expect construction insolvencies to
accelerate in 2026,” said Professor Francis.
“A new positive, time-limited stimulus for house building
demand is urgently needed from the government before
insolvencies further damage capacity throughout the
construction supply chain, including architects, builders'
merchants and product manufacturers, as well as house
builders and specialist contractors. Without these firms
and their critical skills and capacity, any sustained
recovery in house building will be more difficult, slower,
and more expensive over the course of this parliament.”
See - https://constructionproducts.org.uk/news-media-
events/news/2025/october/cpa-releases-autumn-forecasts-2025/
and
https://www.constructionproducts.org.uk/news-media-
events/news/2025/november/cpa-reaction-to-autumn-budget-
2025/
and
https://www.planningresource.co.uk/article/1941182/budget-
reaction-unclear-quickly-promised-new-planning-officers-will-
post
German construction squeeze persists
According to the latest Hamburg Commercial Bank
Construction Purchasing Managers Index (HCOB PMI),
Germany's construction sector continues to struggle.
In fact, reports S&P Global, which compiles the HCOB
PMI, the building industry began Q4 on a still weaker
footing, recording the steepest decline in activity for seven
months.
On the supply side, October data signalled a first – albeit
only marginal – lengthening of vendor delivery times for
nine months. Average purchase prices for building
materials and products meanwhile rose at a slower rate,
but there was a steeper increase in subcontractor charges –
the quickest for over two years.
Housing activity remained the weakest-performing area
with the rate of contraction quickening for the second
month in a row. Commercial projects work also
contracted, while civil engineering activity returned to
contraction after growing in both of the previous two
months. Despite weaker demand for building materials
and products among German builders, lead times on
purchases lengthened for the first time since January.
Average prices paid for building products continued to
rise, as has been the case every month since March,
although the pace of inflation eased notably since
September to a six-month low.
See:
https://www.pmi.spglobal.com/Public/Home/PressRelease/84516
8a5c27f43e99302f6600f55958f
Key step towards Dutch construction circularity
An agreement between the Dutch building materials
sector, including timber suppliers, and the Dutch
government is aimed at increasing circularity and
sustainability in construction, but also the industry’s self-
sufficiency and cost effectiveness.
Timber market development organisation Centrum Hout
reports that the Building Materials Agreement (BMA) was
signed on November 5. Signatories included
representatives of 13 material supply chains, plus
industry associations, including Centrum Hout itself, and
the Ministries of Housing and Spatial Planning (VRO),
Climate and green growth (KGG) and Infrastructure and
Water Management (IenW).
The roadmap for the wood sector describes how it
contributes to the objectives of the Building Materials
Agreement, ‘playing a key role biological and technical
cycles of the circular economy’. The BMA is described as
a ‘significant step towards a circular construction
economy’.
See: https://www.centrumhout.nl/centrum-hout-ondertekent-
bouwmaterialenakkoord/
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