AMA Research report weighs the effects of Brexit on construction

According to an AMA Research report, named Overcoming Brexit Uncertainty, by the organisation’s chief economist, Tom Hall, the British construction sector is very susceptible to either damage or consistency depending upon whether a deal is accepted.

In particular, the report talks at great length about how the already damaging skills shortage, which has plagued the construction and manufacturing sector for some time now, will be made even worse in the event of a disruptive ‘No-Deal’ Brexit.

Going into further detail, the report states that an intensified skills shortage will apply to both skilled and unskilled labour as well as to permanent and contracted workers, taking an indiscriminate toll upon productivity as EU workers are forced to leave.

Another issue, upon which the report touches, is that of supply chains, with the import of goods, raw materials, and components being made all the more difficult under a disruptive ‘No-Deal’ as a consequence of the absence of certain trade deals and leniencies.

Due to a globalised economy, business, especially those within the construction and manufacturing sector, have not been required to stockpile the aforementioned materials and components and have instead been able to operate through a ‘just in time’ process.

But without access to a globalised economy, when expelled from trade deals under a ‘No-Deal’ scenario, the sector would be extremely susceptible to material shortages and so, in preparation for this possibility, some construction and manufacturing companies have been stockpiling goods.

Mr Hall stated: “As the deal agreed between the EU and the UK in principle winds its way through the remaining legislative and parliamentary hurdles, the detail remains vague at this stage. It should become clearer as details of the agreement emerge over the next few days.

“It remains relevant, however, to understand and assess the different possible scenarios and the likely impacts on companies in the construction and manufacturing sectors.”

In the event that a Brexit Deal is accepted the British economy is still expected to grow, although it will do so at a slower rate than otherwise, but under a ‘No-Deal’ scenario the Bank of England forecasts a three-quarter recession which will universally damage all sectors of the British economy.

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