Report highlights impact of Brexit uncertainty

The latest Glenigan Index has revealed the immediate effect that of the EU referendum on the UK’s construction industry.

Starts in the three months to September were 9% lower in comparison with last year and 15% down on the previous quarter. These decreases were exacerbated by drops in non-residential and civil engineering work.

This was offset by residential starts, which rose by 9% on 2015’s figures and 4% on the previous three months.

Non-residential project starts saw an 18% fall on a year ago and were 28% lower than during the second quarter of 2016.

Office and industrial project starts saw significant drop offs, down 26% and 41% down respectively on a year earlier.

There was disappointment for the civil engineering sector, with project starts being down 31% on a year ago.

The north and east of England saw the largest drop offin project starts in the UK. The East Midlands, North East, the East of England and Yorkshire & the Humber endured the sharpest declines with the value of project starts dropping by 24%, 50%, 39% and 43% respectively on 2015.

There was little movement in London and the South West, with decreases of just 2%.

The South East and Scotland, however, experienced increases of 12% and 8% up on a year ago. Northern Ireland also enjoyed a sharp increase of project starts.

Allan Wilén, Glenigan’s Economics Director, described the decision of some private sector investors to delay their investment decisions as “unsurprising” due to high levels of political and economic uncertainty.

“The strength of residential activity is more encouraging and was driven by increases in both private and social housing projects starting on site. The development pipeline is also encouraging with residential approvals during the first nine months of 2016 being 26% up on a year ago.

“Looking further ahead, the political rhetoric at the Conservative Party conference included plans for additional investment in the built environment, especially housing. The forthcoming Autumn Statement should provide greater clarity on the scale and timing of the Government funding that will be available to help boost house building and to accelerate other planned public sector construction projects.”

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