Richard Threlfall, head of infrastructure, building and construction at KPMG UK, comments on the Markit/CIPS UK Construction PMI. It highlights that UK construction output fell again in July. Richard said:
“The Brexit vote is forcing the construction sector to navigate turbulent waters. The PMI’s anecdotal evidence suggests that economic uncertainty following the EU referendum was the main factor weighing on business activity in July, especially in the commercial building sector. The figures show the vote has also weakened demand for new orders, led to greater risk aversion, and encouraged a wait-and-see approach to decision making across the construction sector.
“In the longer term, a lot will depend on the path the UK carves out for itself: whether it chooses to sail the seas alone or manages to join a flotilla of like-minded others to make its prospects stronger. However, the economic impact will be significant under most outcomes, with UK GDP potentially 4% to 6% lower by 2031 than if the UK had voted to remain in the EU. This will inevitably impact on construction demand.
“Businesses need to start planning now for a range of possible scenarios including new tariffs and other trade restrictions, pressures on wages and labour availability, and a deterioration in public finances.”