Brexit Effect

Brexit effect restricting construction project pipelines.

The construction industry is reporting that project books are contracting as the Brexit effect rolls on, with investors exercising caution over investment decisions, amidst the added political turmoil of the recent General Election.  

The construction industry has experience a contraction since Q1 2017 according to recent survey data published by the Royal Institute of Chartered Surveyors. 

Participants surveyed that are active in development and investment were cautious in their outlook, with only 1:5 forecasting an increase in workload for the remainder of 2017 through to 2018. 

Further assumptions drawn from the RICS survey data suggests that the industrial and private commercial sectors reported the steepest decline in deal flows.  The total number or respondents polled in the survey was 267, with 21% reporting commercial order books heading for a 10 percentage point fall by the end of Q2, over Q1 2017. 

Around 15 per cent of respondents reported an increase in workload in private industrial activity, down 22 per cent from the previous quarter.

It is clear that ongoing economical and political uncertainties ‘appear to be weighing on sentiment’. That said, current conditions and year-ahead workload expectations are holding up rather well relative to the longer-term trend.

Given the ongoing nature of Brexit negotiations, it remains to be seen what impact this will have on financial conditions or the availability of skilled labour to the industry.

Infrastructure activity has remained ’broadly unchanged’, according to the report. RICS said this could be due to ’support from the fiscal commitments outlined in the Autumn Statement last year.

Political uncertainty and doubts over the Brexit negotiations will inevitably take their toll on the industry’s prospects for the coming two years.

But while slower economic growth is likely to impact on new projects starts, particularly in the private sector, the good news is that overall activity across the industry is set to continue expanding.

#brexit #realestate