Brexit Positives for the Construction Industry…
“Business intelligence unit Glenigan, which hosted the briefing this morning, is also revising its forecasts down this year, with the expectation now that project starts will fall by 2 per cent in 2016 – down from its original forecast of a 6 per cent increase last year. This morning’s panel discussion revealed a number of possible positives for the industry.
First, there are a number of sectors where there is significant pent-up demand that cannot be ignored; education, in particular, is forecast to grow in line with ever-increasing demand for secondary school places.
And in the hotel and leisure sector, the lower pound could encourage both domestic and international tourism, which has the potential to ramp up demand for more space in the sector.
Allan Wilén, Glenigan’s economics director, said that his forecasts for government spending were “virtually unchanged” as a result of the Leave vote.
Then there’s infrastructure: in spite of question marks over Hinkley Point C and airport expansion, there were three positives that the sector could take from the vote, said the panel.
First, the referendum result has only heightened the divide between the Northern Powerhouse and London, according to Arran Russell from political monitor DeHavilland.
He said with the North in the main voting Leave, it “adds to the need to address the imbalance” between the North and the South, meaning investment in northern infrastructure should be seen by Westminster as all the more important.
There is also the issue that, if the economy struggles further, there will be the need for the government to inject funds to boost activity.
These often come in the form of infrastructure investment, and the panel agreed that the roads sector, in particular, would need to be ready to have “spades in the ground” should the government choose to take this route.
And the final piece of the puzzle is George Osborne.
Although his role is not yet guaranteed in a new cabinet under a new prime minister, rumours that he might end up with the foreign office brief were welcomed by the panel.
Having formed strong relationship with Chinese investors, at a time where money is needed to plug the gaps in construction funding, a move to the foreign office may be no bad thing, it was argued.
With the current political climate as clear as mud, don’t expect any major changes yet – but, as the panel said, don’t think it’s all doom and gloom for the industry.”