Although the UK looks set to leave the European Union on March 29th, frustratingly there's still no plan. Constant arguing and back and forth from all sides ensure that, for the public, confidence in the success or integrity of the process is dropping all the time. Just as importantly, confidence from major players within British industry are also feeling the uncertainty bite. This is why the UK construction growth rate has been downgraded again, mainly thanks to the uncertainty over the future.
The 2019 construction output was first forecast to rise by as much as 2.3%. Previously, hopes were high that a raft of new construction roles and positions would grow. Sadly, the CPA’s Winter Forecasts now speculates that growth will be around 0.3%. That’s a massive drop from the hoped-for figures and shows the immense uncertainty that the Brexit process is in the process of creating.
For many people, the uncertainty is one of the primary reasons why the Brexit process might become impossible to continue alongside. With private housing and infrastructure investment stalling, though the 2023 extension of the Help to Buy scheme does mean that output is expected to have risen by 2% and 1% in 2019 and 2020 within this industry.
However, the growth of other projects such as the Thames Tideway and the HS2 installation will see record levels within the infrastructure sector. As with the Government’s ability to deliver a suitable European exit, though confidence is low that the government can deliver on these major infrastructural changes.
The slowdown at both Crossrail and the Wylfa power station suspension has naturally dented confidence which was already low.
Brexit Creating Mass Uncertainty
While by no means the only industry waiting on answers which are yet to be forthcoming, the Brexit process is very much changing the tune of the entire country. Indeed, Brexit-related uncertainty is said to be behind the 20% output drop-off that is expected to come in 2019 alone. This has seen many investors pull out of investments due to the significant costs needed up-front, which is doing little to help mitigate fears over the exit process.
While some sectors look set to benefit – harbouring is expected to see a growth of as much as 22% across 2019 and 2020 – other sectors look set to struggle to see their growth requirements met. It’s hard to know what the future will hold, though the Economics Director of the Construction Products Association (CPA), Noble Francis, was quoted as saying: "Fortunes for construction depend greatly on which sector firms are operating in."
"Our latest construction forecasts are conditional on either a revised Brexit withdrawal being agreed with the EU and getting through UK Parliament or a delay to Article 50. However, even if this occurs, the uncertainty surrounding Brexit is clearly affecting the construction industry in areas that require high investment up front for a long-term rate of return such as commercial offices, which is expected to fall by 20% in 2019 on the back of sharp falls in new orders in 2017 and 2018."
At the moment, the uncertainty is likely to create far more disruption and distraction than create any kind of lasting unity or solution.