• Press Release
  • February 19, 2019

UK construction must build resilience in preparation for potential post-Brexit bounce

  • 29th March withdrawal date set to mark pivotal moment for construction to refocus
  • Construction output growth predicted to reach 5% p.a. in 2019 and 2020, in the event of a ‘soft Brexit’
  • New technology and ways of working will be only way for construction to realise full extent of opportunity

With the final date for the resolution of the Brexit withdrawal agreement fast approaching, Arcadis is encouraging the UK construction industry to focus on building long-term resilience and be ready to take full advantage of any potential post-Brexit opportunity.  Despite ongoing uncertainty, the agreement of the UK’s withdrawal may allow some certainty to return to the market and reduce the amount of focus required for Brexit, especially no deal, planning.

This analysis comes courtesy of Arcadis’ latest Winter Market View. This quarterly analysis of the UK construction market looks at each sector and region to deliver a tender price forecast to inform clients about what is going on in UK construction, helping financial decision making for projects and programmes.

A positive conclusion to Brexit talks is expected to give the UK economy a welcome short-term boost. Assuming the successful conclusion of a deal in which a ‘soft Brexit’ scenario will prevail, industry forecasts suggest 2019 UK GDP growth of 1.5 to 2.0%. This compares favourably with growth forecasts for peer economies including France (1.6%), Belgium (1.4%), Germany (1.6%) and Italy (0.9%). 

Meanwhile, UK construction output continues at a historically high level, albeit the rate of growth has slowed. Capacity constraints and deliverability challenges remain an issue, with materials cost inflation still high at 5% in the year and labour costs at 3% in the year or more across some skilled trades.  Despite this, the residential and infrastructure sectors in particular are expected to remain strong, with Arcadis predicting growth to 2020 inclusive.  

Looking beyond Brexit, the potential for a ‘Brexit bounce’ could – in the event of a ‘soft Brexit’ - signal the expansion of construction output to 5% per year in both 2019 and 2020. However, with the market still experiencing capacity constraints and less room for manoeuvre in obtaining skilled labour, the industry has to prepare for a post-Brexit landscape by doing things differently if it is to meet demand. From embracing precision manufacturing and modular techniques to the growth in digital technologies like BIM and Virtual or Augmented Reality, innovation in construction will be the only way for the industry to successfully respond to the challenge.  

Arcadis has also highlighted the Sector Deal – a national programme aimed at industry transformation and featuring government support for re-training, research and development focused on manufacturing and smart technologies - as a rare opportunity for clients and the supply chain to work together to improve productivity post-Brexit. This will also support the UK’s wider Industrial Strategy, in which the efficient delivery of buildings and infrastructure will underpin the ability of all UK industries to innovate, grow and deliver. 

Will Waller, Head of Market Intelligence said:  

“Whilst Brexit has exposed many of the challenges and opportunities facing construction, at the same time it has detracted from the industry’s ability to act on them by absorbing attention and focus. The 29th March won’t signal the end of Brexit, but it should mark the point at which the industry can perhaps refocus on other things."

“Readiness is key. By now many organisations will have post-Brexit contingency plans in place, and these should continue to be reviewed and honed. Working jointly and collaboratively as an industry is going to be the most effective means of managing risk and taking advantage of more positive economic signals as they emerge.” 

A copy of the Winter 2019 Market View can be found here. This includes Arcadis’s ‘five point plan’ to build resilience into the construction industry and support an agile response to post-Brexit challenges. 

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Kerri Moore

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