Brexit and Construction: It’s Still Business As Usual
Those of us who work in or alongside the construction industry have been recently inundated with negative projections and doom-filled news stories about the possible impact of Brexit on our industry. But what has really changed in construction recently, and how much of it can be clearly tied to June’s Brexit vote?
The answer is, in reality, not much.
So there may be some gloomy news afoot about the health of the construction industry, but attempts to pin this to the Brexit vote can only be speculative as there is also some very good news coming out of the house-building market.
Some major construction companies are reporting that there has been no longstanding change in their activity and order books since the referendum, and that consumer confidence hasn’t been unduly affected.
Housebuilder Taylor Wimpey reported in late July that only one month after the Brexit vote, the early uncertainty by customers had diminished, with trading performing within the normal range for this time of year. This strong statement of confidence triggered a major rise in the company’s shares- a rally which has been seen across much of the construction industry since the rapid drop in share prices that immediately followed the Brexit vote.
Taylor Wimpey isn’t alone in saying that Brexit hasn’t impacted customer behaviour. A number of major banks have indicated that there’s been little change in customer activity since the vote, while a senior analyst at Hargreaves Landsdown pointed out in the same article that customer confidence has held up well since the vote, which bodes well for the housing market.
Other positive influences on the housing market include the government’s lend-to-buy schemes, strong demand for homes due to house shortage, and attractive lending rates, as well as the confidence-boosting measures already taken by the government and the Reserve Bank.
So when we look carefully at the impact of the Brexit vote, we realise that very little has changed so far. There’s no doubt that some of this is due to the fact that Britain is still in the EU and hasn’t even triggered Article 50 —and even when it does, has two years to negotiate its exit.
When ‘the divorce’ does finalise, there’s no doubt there will be impacts on construction—whether that’s labour pressures, a different import and export environment for materials, or negotiating new construction industry regulations.
Chances are that the impacts will be a complex mix of positive and negatives, with some people ultimately concluding that Brexit was the best thing to happen to British construction, and some, no doubt, thinking the exact opposite. Regardless, trade will continue, as will investment and construction.
So we’re not saying for a second that Brexit won’t have an impact on the long-term futures of the construction industry (and we’re not in the business of predictions anyway!). It’s just that for now, it’s pretty much business as usual. With good consumer confidence holding up the house-building sector and a new PM focussing on strengthening the UK economy and negotiating a favourable exit from the EU, those of us in construction have some very good reasons to carry on with a positive outlook.