Posted: 2nd August
How Brexit Has Hit the Foundations of the Construction Industry
While construction companies across the UK seemed initially stable in the approach to the EU referendum, they – alongside other sectors like real estate – face a period of serious uncertainty following the surprising Brexit vote. According to Begbies Traynor – the company responsible for conducting Red Flag Alert Research in 2016, has been monitoring the financial health of companies during the time since the referendum – uncovering signs of significant financial distress.
Largely, the cause for the discomfort currently prevalent throughout the construction industry, has been the number of high-profile investors that have chosen to pull their money away from UK property since the vote was conducted. Experts have predicted since then that prices of property in London alone could plummet by as much as 20%, reducing the need for both construction, and real estate marketing.
It has been speculated that part of the sensitivity shown as a result of the Brexit vote could come from residual anxiety left over from the 2008 financial crisis – which left the industry scarred and nervous for the future. However, whatever the paramount cause behind the industry uncertainty, the change has left the nation unable to build the homes and properties that consumers need, both where they need them, and at a reasonable price.
Looking to the Future
Fortunately, though the current events have left the construction industry in a state of serious uncertainty, that doesn’t necessarily mean that we should universally prepare for disaster. While more than half of the country voted for Brexit, the result has lead to a serious shock across the nation, which was undoubtedly going to cause some uncertainty in everything from job security, to the economy.
On the plus side, there is still a possibility that this impact could simply be a short-term setback for the construction industry. After all, the commitment made by the Bank of England to maintain interest rates at a record low, as well as the inference from the government that corporation tax may be cut to less than 15%, could go some way towards stabilising the economy. In the meantime, we can expect the business environment to worsen slightly, before we find a way to settle into the new normal.
Assuming that the cabinet, and Prime Minister Theresa May invoke Article 50 as planned, the short-term future may be rocky, but the chances are that Britain, and the construction industry will find a way to thrive again.