Brexit update. What is the mood in the construction industry like since 31st January 2020?
Now that the UK has officially left the EU a period of uncertainty has, thankfully, come to an end. However, for the construction sector in particular, it may be that another is just about to begin. As an industry, construction has faced its own obstacles in recent years, including reductions in output levels and a lot more pressure being placed on the sector to tackle the housing crisis. The fluctuating economic and political climate has made this an even more challenging time. But now, as we start to leave the debates over whether Brexit will actually happen behind, what is the mood in the construction sector like today?
Workers and materials
When it comes to the topic of workers and materials there is still a lot of hesitancy in the construction sector. Traditionally this is an industry that has been reliant on a flow of people and raw materials from the EU. Although a No Deal Brexit hasn’t happened in terms of the UK leaving the EU on Brexit day without a ratified withdrawal agreement it could still arise if there is no deal with the EU before the end of the transition period at close of the year. This means that there is still considerable uncertainty over whether the construction sector will still have the same access to people and resources from the EU and how this is likely to affect the industry as a whole. Key among these issues is ensuring that UK companies can still get materials without facing costly tariffs and handling the current skills shortage.
The Boris Bounce
When the results of the general election were announced in December 2019 there was a boost for many, across industries. Property, for example benefitted with an almost instant increase in house prices. There was also movement in development as projects that had been shelved due to political uncertainty were suddenly brought to life once again. However, there is no indication of how long this is likely to last, especially as we get closer to the end of the year if there is no deal with the EU in place.
Construction specific challenges
2019 was not a great year for the construction sector. In particular, June last year was the sector’s worst performing month for a decade as output levels took a serious dive. However, figures from Markit/CIPS UK Construction Index for January, although not amazingly positive, did at least indicate that output decline was slowing down. This is partly due to the greater political certainty since the general election and also thanks to a more stable Pound. However, despite this small bounce in positivity the mood in construction remains cautious. Much is riding on the outcome of Brexit transition negotiations and how the government approaches the current housing crisis.
The construction sector, while no longer in limbo, still remains a place where many are cautious. This is a mood that will likely continue for the rest of the year.
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