Home building growth in the UK under threat from a no deal Brexit

Home building is boosting growth of the construction sector in the UK but home building organisations are warning that Brexit is and could continue to affect the sector.

Official figures from the Office for National Statistics (ONS) show that overall the UK construction sector grew by 2.1% in the third quarter of 2018 compared with the previous three months.

This is despite unparalleled levels of political uncertainty around the very real prospect of a no deal Brexit scenario.

A breakdown of the figures show that new house building increased by 4.9% while overall construction output recorded an all-time high and the total value exceeded £14 billion for the first time since monthly records began in 2010.

Blane Perrotton, managing director of the national property consultancy and surveyors Naismiths, pointed out that house builders have provided a rare bright spot in terms of the economy.

Blane Perrotton said:

‘Residential building isn’t just the most active sector within construction, it has become a playmaker for the wider economy. Its dynamism powered the construction industry to solid growth in the latter part of 2018, with output in the three months to November expanding at a brisk 2.1%, a rate the wider economy can only dream of.’

But he warned that despite its current momentum, the industry’s ability to defy Brexit headwinds is far from guaranteed.

He continued:

‘New orders are slowing and builders are painfully exposed to economic gravity. Labour shortages and rising material costs are slicing through margins, and cut-throat competition for tenders is forcing contractors to bid low, and sometimes painfully low, for work.’

The Federation of Master Builders (FMB) said that the Government must not be complacent about the damage a no deal Brexit would cause amid positive signs of growth in the UK construction industry.

Sarah McMonagle, director of external affairs at the FMB, said:

‘We are urging the Government not to allow these results to create a false sense of security. Since November, political uncertainty has cranked up and is increasing every day. A growing and prosperous construction sector will be a distant memory if the Government allows the UK to crash out of the European Union without a deal in place.

‘The construction industry is also extremely concerned about the Government’s proposed post-Brexit immigration system. In the Immigration White Paper, published at the end of last year, the Government revealed that they will make few allowances for low skilled workers to enter the UK post-Brexit.

‘Most tradespeople will be defined as low skilled and therefore will not be permitted to enter the UK, regardless of whether they are from the EU or further afield. It is crucial that the Government introduces a post-Brexit immigration system that continues to allow us to draw on essential migrant workers or else their house building and infrastructure targets will be totally unachievable.’

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