Concerns over Brexit have “intensified considerably” with industry firms increasingly cautious over the negative impacts of leaving the EU, according to Gleeds’ latest market survey.
The consultancy’s research found growing concern around the progress of Brexit negotiations, with 80 per cent of respondents to its Market Intelligence survey wary of the consequences on the industry.
Gleeds director of research and development Sarah Davidson said: “Pessimism around the UK’s departure from the EU has intensified considerably over the course of 2017.”
The latest findings contrast with its last report six months ago before June’s snap election, which had found client confidence returning to the sector.
Respondents’ main Brexit concerns were around reduced foreign investment, higher import prices, restrictions on trade and labour movement, and a general destabilising caused by uncertainty.
Asked about potential upsides of leaving the EU, firms cited improved availability of government funding and greater ease in pursuing international trade deals.
Outlooks for the medium term were weak, Gleeds found, while almost half of respondents said there had been a decrease in construction activity since last year’s referendum.
In spite of the increased pessimism, only a quarter of those surveyed were preparing for a decline in conditions in the next 12 months.
CPA economics director Noble Francis said much of the activity currently on site will have been signed prior to the EU referendum, and that any changes caused by the vote are likely to become increasingly visible.
He said: “In terms of activity, the lack of progress on the Brexit negotiations has increased uncertainty and this has adversely affected new orders in some areas of the industry, such as commercial offices and prime residential.
“Both offices and prime residential are [often] speculative developments, often dependent on international investment looking for a long-term rate of return.
“Activity on site is still relatively high but new projects starting in 2018 will be affected.”
Gleeds’ report also found labour shortages to be a continuing problem.
Three-quarters of firms reported difficulty in recruiting staff, which Gleeds said could be due to a decrease in the migrant workforce – a trend identified by 70 per cent of the supply chain.
On the subject of materials, Gleeds highlighted cladding as a problem area for the industry.
“The production of cladding with a non-combustible core needs to be improved to meet safety standards and there will be an inevitable delay in getting it to the market,” the report said.
“Due to the concerns of installers and designers around liability, the cost has increased to levels where the cost of aluminium-based cladding sheet systems has doubled, and is often now more expensive than a full curtain walling installation.”