Construction Firms are Not Afraid of Brexit

Construction Firms are Not Afraid of Brexit

Dean Watson sees no real change in the construction industry’s outlook regarding Brexit.

Amid mounting interest and argument and counter-argument as to what kind of deal the UK will negotiate to leave the EU, one thing is certain, the construction industry is not afraid of what lies ahead.

Construction output remains on an upward trend and although growth is slow, this is balanced by an upturn in orders, as September saw the strongest new order books since December 2016 according to the HIS Markit/CIPS UK Construction Purchasing Managers’ Index. This improvement was a contributory factor to rising construction sector employment, with increasing use of subcontractors registering the fastest pace of growth for more than two and half years.

Significantly, September saw a bigger than usual rise in the number of apprentices and trainees. This, in itself, is an indication that construction businesses are looking ahead and taking action to encourage young people into the industry. We see this as a positive move as it helps firms to build the workforce they need whilst also doing their bit to address the skills crisis.

Construction companies are well aware that a limit on migrant labour would likely exacerbate the skills issue, pushing up project costs due to higher wages as demand for skilled and non-skilled labour outstrips supply. London, in particular, would bear the brunt since a quarter of all construction workers operating in the capital are from the EU.

It has long been predicted that construction products will cost more post-Brexit due to exchange rate fluctuations, but higher prices are already here. It’s a concern, but it’s something that the industry has been mindful of since the referendum and the transition period should enable firms to adjust to a new norm. Similarly, fuel prices are rising and there is a continuing shortage of raw materials, due in part to lengthening supplier delivery times. The industry is learning to cope and will continue to do so after March 2019.

According to various reports about the state of UK construction many in the industry are refusing to obsess about what life will be like post-Brexit because the long-term outcome is well-nigh impossible to call. Uncertainty is unwelcome, of course, as it tends to dent confidence and put the brakes on business planning, but it doesn’t suggest that the industry at large is fearful of what the next five, ten or twenty years hold in store.

Download Vision November 2018 …