Will construction see an upturn in the UK? (Copy)

The construction industry of the UK is one of the biggest employment sectors in Britain; millions of people are employed by a vast multitude of construction firms, and the value of construction work in Britain rose to its highest levels ever in 2016 with a total of £99 million. This rise was primarily driven by growth in the private sector. 

As you’ll already know, however, there has been many changes within the UK since 2016, namely that of Brexit. The decision to leave the EU has brought up many challenges to the construction industry, with the severity of their effect still to be decided by what type of Brexit we get. Read below to find out if construction will indeed see an upturn in the UK or carry on the same vein as the contractions the industry has recently seen. 

A recent upturn

The good news is that the construction industry has recently emerged from the technical recession it underwent in October. Official data shows that despite construction contracting for two consecutive quarters this year, the PMI (Purchasing Manager’s Index) increased to 50.8 in October from 48.1 in September. Anything above 50.0 on the scale indicates growth, so there are signs that construction is moving in the right direction, and the recent rise was driven by an increase in housebuilding. 

Subdued predictions

Whilst the recent rise in construction figures is certainly a welcome one, it comes with subdued predictions for 2018. Economists have predicted that construction will actually flatline next year, which is a downwards revision from the previous estimate of a 0.7% growth. The Construction Products Association (CPA) cite reasons for this being a ‘toxic mix of subdued economic growth’, rising inflation and falling real wages over the next two years. 

Brexit

A point to remember however is that the CPA’s predictions are largely related to the uncertainty that has been spawned by Brexit, and a deal which keeps the UK in the single market could provide a possible remedy to these somewhat dire predictions. Why? Staying within the market would mean that investors may be more likely to take up projects in the UK, creating more jobs and sustained work over a longer period of time. What’s more, staying within the single market would also mean that Britain wouldn’t have to pay high tariffs on materials it buys from Europe, which means lower costs for businesses across the country.