Brexit Uncertainty Dampens UK Construction Market
Orders fall to lowest level in a decade
As U.K. parliamentary turmoil over how the country should quit the European Union (Brexit) intensifies, construction orders have fallen to the lowest level in a decade, according to the influential IHS Markit/CIPS UK Construction Total Activity Index.
“Brexit uncertainty” was cited by contractors for damping demand, particularly in the commercial building sector, notes Tim Moore, Economics Associate Director at IHS Markit, which compiled the August survey.
New orders have dropped every month since April at the fastest rate since March 2009, at the same time business expectations among construction firms were “the least upbeat since December 2008,” the survey found.
Civil engineering activity also dropped in August “at a relatively sharp pace” while house building “fell only slightly.” Employment trends were “relatively resilient” in the face of tight resources, while input cost inflation fell to its lowest since March 2016.
Economic uncertainty has increased since the newspaper columnist Boris Johnson replaced former Conservative party leader Theresa May in late July becoming U.K. prime minister. He has vowed to complete Brexit by Oct. 31 with or without agreement with the EU on divorce terms .
A “no deal Brexit” would be economically damaging by leading to the introduction of tariffs between the U.K. and its former trading partners and cause congestion at ports of entry as new customs arrangements would have to be introduced, according to most forecasts.
This week, the U.K. parliament is attempting to compel Johnson to seek its approval for any EU departure terms in moves strongly opposed by the government. Using the U.K.’s arcane unwritten constitution, Johnson has ordered the closure of parliament for five weeks from next week.