Two leading forecasters are downgrading their expectations for UK construction following the vote to leave the EU
Hewes & Associates and Leading Edge have both said their forecasts will be revised downwards in the short term following the Brexit vote.
Speaking to the AJ’s sister title Construction News, Hewes & Associates founder Martin Hewes blamed the ‘political turmoil’ that had arisen from the vote as the main reason for his revisions, rather than the economic impact the vote to leave could have on the sector.
Leading Edge managing director Mel Budd said he saw ’more negatives than positives’ in the short term, adding that the uncertainty following the vote would lead to a slowdown in construction activity, which would in turn impact output.
In its last forecasts published in May, Leading Edge predicted 3.3 per cent output growth this year followed by 3.5 per cent in 2017, while Hewes & Associates had expected growth of 1.4 per cent this year, followed by a decline of 2.7 per cent in 2017.
Recent surveys have suggested that construction was adversely affected in the run-up to the referendum, with the Markit / CIPS Construction PMI revealing that industry activity fell to its lowest level for seven years in June.
Both Hewes & Associates and Leading Edge argued that private housing would be the sector hit hardest, with restrictions to freedom of movement and falling house prices set to impact the market.
Housebuilders have already reported a dip in share prices in the aftermath of the referendum, with many posting double-digit declines.
However, both forecasters agreed the impact would be short term, with a ‘shallow’ recession expected in 2017, rather than a long-term slump akin to 2008’s financial crash.
Construction Products Association economics director Noble Francis said the true impact of the vote would only become clear once ‘uncertainty has died away’.
’Until we get to a period of time post-referendum when we have data that clearly highlights the direction [in which] each of the major sectors is going, then it will have to be very much around ‘scenarios’ rather than specific forecasts,’ he said.
Meanwhile, in a comment piece published yesterday, former RIBA president Jack Pringle predicted the UK was set for a two-year recession.