Post Brexit Crystal Ball on the Construction Industry
With the general election over and the implications of a Conservative government supported by the DUP provoking uncertainty across many in the construction industry, William Waller, Market Intelligence Lead at Arcadis, will provide some insight into what the future holds at this year’s BRUFMA Conference, as part of his presentation entitled, Lifting the lid on Pandora’s box; an overview of UK construction in 2017.
The vote for Brexit has heightened volatility, uncertainty, complexity and ambiguity across the UK construction industry. The unprecedented operating environment of 2017 houses both challenges and opportunities and the success of the construction market will rely on the willingness and ability of key decision makers to take greater risks against a backdrop of geopolitical and economic flux. Will this play out as a new age of collaborative risk sharing or a return to the adversarial behaviours of the recent past?
A Complex Picture of Uncertainty
In order to do this we need to look at what is Brexit related and what isn’t and whether it is political economic and construction specific. Is the Brexit deal achievable and what will the new government mean for construction industry policy? How will trade barriers impact industry and affect the wider economy and sterling? All these add up to a complex picture of uncertainty.
On the strength side, the UK economy has had a great performance and last year the UK was the best performing economy in the G7 group of countries. But it’s also an economy that relies heavily on consuming spending (60%) and when that slows, the economy can take a hit. The economy is vulnerable to the negotiations and the progress of those, which in turn, will have an impact on confidence. On the opportunity side, the UK is still a great place to invest and is relatively stable despite Brexit.
Does Brexit Lead to a Fall?
The construction industry is highly cyclical and intrinsically linked to economic performance. History tells us that construction activity follows economic performance. Construction demand is currently at a peak level of output and is driven principally by residential and infrastructure sectors. For example, residential output is 100% higher today than it was in 2010. One of the big questions we are wrestling with is the current level a peak, and is Brexit going to lead to that falling?
Join us to explore the observations, predictions and potential mitigations when it comes to construction prices, costs, supply and demand as the UK enters the next crucial phase of Brexit negotiations.
For more information about the BRUFMA Annual Conference taking place on the 28th June at The Building Centre, 26 Store Street, London or to visit the BRUFMA Conference page here.
Do you agree with Will Waller? Or have an opinion of the effects of Brexit on the construction industry? Please leave comments and feedback below.