“This is what I call a banana chart,” begins Bloomberg Intelligence economist Dan Hanson.
It’s nothing to do with imports or exports of tropical fruits – it shows the projected economic impact of the vote to leave the European Union, which, as it happens, is shaped like a banana.
Speaking at today’s Glenigan breakfast briefing, hosted at Bloomberg HQ in central London, Mr Hanson outlined why we shouldn’t expect a recession in the immediate aftermath of the vote to leave, but also showed that the impact of the vote would be a much slower burn over a longer period of time.
It’s quite like the curve of a banana – a slow but steady downturn in GDP growth and consumer spending, with a gradual upturn over a 10-year period.
Bloomberg’s forecast points to inflation of 3.1 per cent in 2017, which Mr Hanson highlighted as one of the key things for businesses to look out for next year, alongside a projected slowdown in business investment and a still-weak sterling.
Consumer spending, he said, has maintained the “keep calm and carry on” situation that the country has seen in Q3, meaning that, in the short term, it will be slower growth, rather than a recession, that the economy will have to grapple with.
How all these factors play into the construction industry was outlined by Glenigan economics director Allan Wilén, who picked out key growth areas for contractors to look out for in 2017 – despite it being the start of the banana’s downward curve.
The hotel and leisure sector has been the first sector to see an immediate boost from the vote to leave, with Glenigan now predicting a 2 per cent increase in project starts in 2017.
The idea of ‘staycations’ – Britons staying in the UK for their holidays rather than travelling abroad – alongside growing visits from global tourists wanting to take advantage of the weak pound, has caused clients to bring forward a number of planned hotel projects, making this a sector to watch over the next six to 12 months.
And project starts will bounce back by 9 per cent in the industrial sector next year, after falling by an estimated 22 per cent this year, with big demand set to come from the logistics sector.
Unfortunately, the outlook as a whole isn’t as rosy – with total starts forecast to fall by 4 per cent in both 2016 and 2017 – but Mr Wilén described the industry’s situation as “relatively benign” in spite of current uncertain headwinds.
All eyes are now on tomorrow’s Autumn Statement to see if the chancellor can provide a welcome boost to the industry.
Also in the news
Plant hire firm Hewden has entered administration, with rival A-Plant moving quickly to snap up three of its divisions.
It’s the latest in a spate of high-profile administrations in the last six months, and CN has analysed the stats to see if this is another warning sign for the industry.