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Builders Blame Brexit Crisis for ‘Worst Month in Over a Decade’

Written by: Keith Tully

Published: 2nd July 2019

Builders laying paving stonesThe UK’s construction sector suffered its worst month in more than a decade during June of this year, with the uncertainty surrounding Brexit cited as a key reason why.

Builders and other operators within the construction sector have said that the ongoing Brexit crisis has had the effect of hindering new projects and dampening activity across the country.

It has been suggested that a significant proportion of public and private sector organisations have effectively put their construction plans on hold as they wait and see whether or on what terms the UK leaves the European Union.

Over the course of June, the construction purchasing managers’ index (PMI) compiled by IHS Markit and the CIPS recorded a figure of 43.1, which is the lowest level seen since April 2009 and the aftermath of the global financial crisis.

The figures relating to the construction sector follow soon after the manufacturing sector’s numbers for June showed activity in those areas of the economy also declined sharply.

A reading of 48 for the latest manufacturing PMI represented the sharpest rate of decline seen in the sector since February 2013.

Tim Moore from IHS Markit has said that political and economic uncertainty was the reason cited most often among construction companies as the cause of their subdued activity in recent weeks.

“While the scale of the downturn is in no way comparable to that seen during the global financial crisis, the abrupt loss of momentum in 2019 has been the worst experienced across the sector for a decade,” he said.

“A continued lack of new work to replace completed projects illustrates the degree of urgency required from policymakers to help restore confidence and support the long-term health of the construction supply chain,” he added.

Duncan Brock, who is group director at the Chartered Institute of Procurement and Supply (CIPS), described purchasing activity and new orders across the construction sector as having “dropped like a stone” during June.

“The pain of Brexit indecision was felt across all three sub-sectors but the previously resilient housing sector suffered the fastest drop in three years which is frankly worrying news,” he said.

Keith Tully

Keith Tully

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Keith has been involved in Business Rescue since 1992, during which time he’s worked for both independent and national firms. His specialties include company restructuring matters and negotiating with HMRC on his clients behalf.

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