Uncertainty still shrouds the UK construction Industry. With Brexit negotiations still ongoing, the sector continues to suffer from the economic effects of the exodus from the EU. The recently concluded elections that was expected to ease the already difficult situation, only succeeded in tightening the noose.

Investors’ doubt over the economic fate of the UK after Brexit has brought about a spiritless approach to construction investment. While some have stalled in executing plans, others are holding back on making plans at all.

2017 has seen various projects put on hold and a lag in commercial work has led to the industry taking on few workers. According to the Office of National Statistics (ONS), construction output has been decelerating since the second quarter of 2017. The 0.5% decline in July, was followed by a 0.9% dip in September, which represents the first quarter-on-quarter decline since Q3 of 2012.

Delayed construction projects

There have been delays in a number of projects and completion dates have been moved up months after initial projections. This is due to the run up to Brexit. After Brexit, funding from the EU – which the UK has immensely benefited from – will cease to come in. Certain projects like the HS2, rely heavily on said funding, and cessation would certainly lead to another bump in the road.

Other projects on the other hand, are witnessing their own challenges. With engineering sites like that of the Hinkley Point C power plant experiencing faults and consequent budget deficit. These situations are being reported to likely lead to completion behind schedule. The industry has survived worst, though. Established engineering brands like Hopkinsons have seen off greater levels of economic turmoil.

PMI contraction and expansion

The monthly IHS Markit/CIPS UK Construction Purchasing Managers’ Index has been seeing unprecedented levels of fluctuations over the months. The construction industry saw a dip in growth from July’s 51.9 reading to 51.1 in August. In September, the number further reduced to 48.1.

With the PMI, figures above the ’50’ mark indicates expansion; below 50, contraction; and at 50, it indicates stagnation.

For October, however, the PMI strengthened to 50.8 against the stagnant 50 reading. The meagre strengthening has been credited to the growth in the housing sector. Growth in civil engineering and the commercial sector has shrunk.

Slump in construction market confidence

Players in the UK construction Industry are losing faith in the sector as business activity confidence for the year ahead met a 58-month low. The concerns are being blamed on various conditions from low stock prices, struggle in material procurement to lack of commercial orders, concerns about economic performance, lack of projects in the pipeline, and, of course, Brexit worries.

Concluding

Since the referendum results came to light in 2016, there have been ripple effects in various UK industries and construction has been one prominent casualty. The industry heavily relies on the UK’s EU membership for labour, materials, and investment. And with ties about to be severed, the fate of the sector now lies in the outcome of Brexit negotiations with the EU, and future government economic policies.

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