Business uncertainty over the Scottish independence referendum has led to a downturn in privately funded work in Scotland, including an annual fall in retail schemes of almost 60 per cent, a leading industry analyst has claimed
According to Glenigan, the value of new projects in almost every construction sector not funded by the public purse has dropped in Scotland since the start of the year – bucking the national trend of continued growth.
The revelation will fuel fears that a yes vote could plunge Scotland into ‘economic limbo’, as predicted by Richard Murphy last week (AJ 05.09.14).
Glenigan’s figures show that the value of retail and office schemes approved for planning north of the border over the past 12 months fell 59 per cent and 24 per cent respectively compared to the year before. There was also a dip in the industrial sector.
However, the privately funded housing sector, as in the rest of the UK, saw a marked increase.
Glenigan’s data also pointed to a sharp rise in the number of government-backed projects being approved. Consented education schemes have leapt by 131 per cent compared with this time last year and social housing schemes are up by 89 per cent.
Glenigan’s economics director Allan Wilén said the data reflected a ‘let’s sit on our hands-and-see type approach’ from the private sector.
He said: ‘The decline in private non-residential planning approvals and project starts are not a direct vote of confidence for or against an independent Scotland.
‘However, the drop in activity, following a relative positive performance in 2013, reflects that investors are temporarily deferring decisions due to political and economic uncertainty ahead of the next week’s vote.’
He added: ‘In the event of a yes vote it will be important that the key economic issues are quickly resolved in order to provide the private sector with the confidence to press ahead with planned investments.’
Earlier this week, billions of pounds were wiped off the value of major Scottish companies when a YouGov poll suggested the yes vote had edged ahead, causing volatility across the markets.
The concern was shared by a number of architects who responded to the AJ’s survey on Scottish independence.
One respondent said: ‘We have a number of jobs which will be stalled or shelved in the event of independence – particularly commercial office buildings.’
Babak Sasan of Glasgow-based Sasan Bell said: ‘Speaking to property agents and other professionals it appears investors and developers – taking [oil-rich] Aberdeen out of the equation – are holding back on new developments in Scotland and are looking to the reaction from other sectors of the business community following the 18 September.’
But Mark Allan, a director of Edinburgh practice CDA, said he had seen no sign of this.
He added: ‘I would be cautious in my analysis as these figures are related to planning approvals, which had been in the planning system for six months to a year.
‘We are active across most building types and we haven’t noticed any drop off. There’s anecdotal evidence of some investors holding-off bidding for sites, but it hasn’t had any impact on us. The major projects we have been working in have carried on regardless.’