Construction industry defies EU referendum uncertainty

Fears that the uncertainty created by EU referendum could negatively affect markets in the UK was dispelled by the construction industry which was an almost 8% rise in contracts during May, writes Property Developer Richard Carr.

Projects

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Construction industry maintains strengh

According to Barbour ABI, £6.1bn worth of new contracts were awarded during May, which is 8% higher than the same month last year. The number of construction projects agreed in the UK was also over 10% higher than the same time 12 months ago.

Scotland led the way in terms of contracts awarded, with its Beatrice offshore wind farm project in the Moray Firth valued at £1.3bn.

London followed closely behind with its largest project being the £325.8m project with the Canary Wharf Group to build new office building Ten Bank Street.

Infrastructure

The new build market remained strong throughout the month, however infrastructure projects accounted for the highest proportion of contracts by value at 39%, while the residential sector contributed 25%.

Michael Dall, lead economist at Barbour ABI, said: “With May figures hovering around the £6bn mark, similar to the previous two months, this indicates a stable construction market that is looking towards the long term.”

Outlook

Dall predicted that leaving the EU would likely cause a significant change in the outlook in the short term with the most notable factor being a reduction in activity.

Despite the positive output in May, there was obvious uncertainty among developers, however the low rate of unemployment and increasing consumer spender had helped to boost confidence in UK businesses in May.

Richard Carr believes the UK will be richer having left the EU: “Once the shock of leaving the EU is digested it’s highly likely that the pound will rally. As an isolated nation we won’t be affected by the redistribution of wealth that is likely to happen in the European Union.”