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Four in five industry firms fear negative Brexit impact

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.”

Readers' comments (1)

  • The big problem (as agreed at our local Tory MP's local meeting as a result of several questions) is that we haven't told the 27 remaining countries what the advantages to them will be when we leave and we need to do so urgently.

    These benefits include access to our free trade agreements with potentially the rest of the world without needing the EU with all 27 countries in agreement and the EU restrictions on government support (tax/VAT breaks and the like as we did pre-EU with Nissan and Sunderland. All they need is for their manufacturers to invest in final assembly plants in the UK (preferably with UK government incentives in the North East and North West - this would also to a considerable degree the housing shortage by moving work to areas with empty and low cost housing).

    We also need to explain the Work Permit (Note: Not permanent residency permit) and the preferred nation status that previously operated for work access with Ireland and Western Europe pre-EU.

    It was also made clear at that meeting that the Immigration discussions going on in Parliament (including cross party were not taking to account the DEFRA figure for a UK self sustainable population (Russia is moving towards this as a government policy and Italy has said it is full and can take no more - both are by comparison with the UK economically under populated whereas we are grossly over populated).
    In fact very few if any MPs know what the DEFRA figure is; do you if not Google it.
    We had no need to invoke Article 50 as we already knew the result from Cameron's efforts.

    Why don't the government open a website for expressions of interest in a free- market deal with the UK from countries and firms worldwide (the Germans will not tax one seventh of Mercedes output - exports to the UK - out of existence and that goes for many other companies and EU countries as well)

    What we need is joined up and proactive thinking and obedience to the will of the people, if not we will prove the doom and gloom mungers right.

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