A new report explains the detrimental impact a no-deal Brexit would have on the construction industry.
Glenigan’s Construction Outlook Forecast for 2019-20 said the outlook for the industry is critically dependent upon the Brexit agreement and the planned transition period. It added: “A no-deal Brexit would have a disruptive impact on the UK economy and construction activity over the forecast period.”
The report predicted issues with the building materials supply chain should a no-deal Brexit happen, as around 16% of construction materials and products are imported, and 10% from the EU. It said that near term congestion at ports could disrupt the timely delivery of products through the supply chain and to site.
It also predicted the following should a no-deal Brexit happen:
• Further falls in business investment due to lack of confidence from the uncertain outlook would depress industrial and commercial construction activity.
• Fewer private housing starts as housebuilders respond to a weaker housing market and drop in new house sales.
• A potential increase in public sector spending as the Government seeks to offset the impact of a fall in private sector investment and brings forward planned capital expenditure.
• The reduced availability of EU labour would make it harder to recruit and retain skilled site workers. The direct impact would be most keenly felt in London, where 28% of the industry workforce is from the EU.
The market is forecast to contract next year. Having fallen by 6% this year, project starts are forecast to decline by 2% in 2019 before recovering 3% in 2020.
Whilst overall starts will decline for a third consecutive year in 2019, logistics premises, build to rent, student accommodation and social housing, secondary education and community & amenity are forecast to be growth areas.
A smaller 2% fall is now anticipated for 2019, with a small recovery in project starts anticipated for 2020.