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Don't be fooled: Brexit paralysis is still lurking

James Wilmore

On the face of it, today’s construction activity figures offered a glimmer of good news in what has been a bumpy start to the year dominated by Carillion. 

Activity rose in April at its fastest pace for five months, driven by housebuilding – which is growing at its quickest rate for a year, PMI figures revealed

New orders were also up slightly, leading to an uptick in confidence. 

But dig deeper and there is plenty to be uneasy about – both this year and beyond. And it reaffirms the pressing need for firms to get to grips with whatever Brexit throws up. 

It wasn’t difficult for activity to bounce back last month as a swathe of projects were disrupted by the ‘Beast from the East’ weather chaos during February and March. 

Secondly, while residential work is steaming ahead – pumped up by Theresa May’s promise to tackle the housing crisis – commercial and civils work rose only marginally.

“Underwhelming” – that was how IHS Markit’s associate director Tim Moore branded the recovery.

But what is really still haunting people’s thoughts is next March, when Britain officially leaves the European Union. 

As KPMG’s global infrastructure head Richard Threlfall told me today: “We have seen some welcome progress (from the government), but it’s way too early to claim we have got beyond Brexit paralysis.”

It’s a sentiment echoed by Duncan Brock, group director at the Chartered Institute of Procurement & Supply: “Economic uncertainty and Brexit-related indecision continue to lurk beneath the surface as obstacles to the construction sector’s stability.”

The workloads of those in the infrastructure and resi sectors should be reasonably insulated from Brexit, according to Mr Threlfall, as they have the benefit of government investment and support. But it’s set to be a very different story in the commercial sector as indecision among clients hampers activity. 

A potential labour shortage remains the primary headache for many. With the industry so reliant on EU workers, particularly in London, bosses are still desperate to know how the skills gap will be filled.

“The December agreement only goes so far and is not helpful for long-term clarity with regards to construction’s labour needs,” Mr Threlfall says.

Adding to the concern is the feared exodus of EU workers, attracted by eye-catching construction jobs on the continent. 

“If you can go get a job on a site where you don’t have to go through controls, you will vote with your feet,” Mr Brock says.

All this suggests firms must start futureproofing now.

Examine your supply chain and work out where the pressure points are, Mr Brock urges. “At least that shows you where the impact will come,” he adds. 

As the fears over the future show, contractors would do well to follow this advice. 

Readers' comments (2)

  • Why are so many companies & people panicking about Brexit? Lets all be optimistic about what's on the horizon after we leave the constraints of the EU. Yes we may experience bumps along the way, but on the whole I firmly believe that Britain as a whole will flourish. There may be issues with labour resources in some sectors, but it will soon be overcome, as hopefully rates will rise, which will attract new talent to the industry. Lets have less of the doom & gloom, & lets all make Brexit work.

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  • We can all be optimistic about Brexit, but the fact is that during this period of negotiation, its having a major negative impact on Commercial Work, which is hurting many companies badly. Including mine!

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