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What Brexit May Mean For The Construction Industry

July 16, 2019

So, although Theresa May has tried and failed to deliver Brexit, we’re still very much in the realm of what may (or may not) happen later this year. And although this goes for every sector, in both the private and public spheres of the UK, there are some businesses with a keener eye on potential results than others.

The worst dip in a decade

It was widely reported in both industry and mainstream media that the construction industry suffered its worst month in a decade in June. And given that 10 years ago we were all in the grip of a global recession, this gives you some idea of the severity of the current situation.

The news hit home when the IHS/Markit/Cips construction purchasing managers’ index (better known as PMI), fell dramatically to 43.1 – its lowest level since April 2009. This followed on from the announcement in May that the economy as a whole was at its weakest since 2012, and the output of the construction sector, along with simultaneous dips in services and manufacturing, played a part in this worrying analysis.

Each of the three main sub-sectors in construction; house-building, commercial and civil engineering, reported dramatic dips in activity, with the threat of a ‘no-deal Brexit’ deterring the start of new commercial projects. It was also reported at the start of July that no-deal could equate to an enormous, £90bn hit to the Treasury, should the next Prime Minister not manage to negotiate a deal.

Not all doom, gloom and tools down

The immediate perception of such worrying figures is that not only are contracts at threat, but the employment of contractors too. However, reassuringly most construction firms have reported that they are still retaining staff, while waiting for the Brexit talks to produce an outcome, and are only expecting the current downturn to be brief.

Like every other sector in the UK, the construction industry is being forced to play things safe, and hope a deal is negotiated that encourages productivity and, in turn, protects jobs. However, if the UK does go down the no deal route, the hope will be that the PMI doesn’t fall even further than it did back in early 2009.

Duncan Brock, director at the Chartered Institute of Procurement & Supply, was quoted in The Guardian as highlighting that the current ‘unknown’ of the Brexit finale is having a substantial impact on new contracts and orders in the industry: “A lack of clarity from policymakers has amplified the poor performance in June,” he said. “Swift decision-making and a break in the political impasse hold the key to pulling the sector out of the quicksand.”

And this is where we are right now, and where it feels like we’ve been for some time. While a ‘soft’ Brexit by no means guarantees that the sector will receive an immediate boost, and no deal doesn’t guarantee further downturn – the uncertainty alone is having a substantial impact. From developers in London, to roofers in Hartlepool, to builders in Aberdeen, the construction industry isn’t exactly holding its breath (Brexit’s already gone on too long for that), but will be eager to see a decision soon.

As are we all. But three years, and a few weeks since it all kicked off, we ‘re still stuck on what may come…

To read more on topics like this, check out the lifestyle category.

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About Me

Hello all!!!! I'm Darcy and I recently started writing on My Zeo about health and fitness (and part of that important health equation is sleep!). As we are all super busy with life, I try to integrate how to stay fit, relax and be healthy and happy through everyday life.

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