Construction Verdict On Brexit – Optimism vs Pessimism? Which Won?

Just like the Brexit vote itself, our latest snapshot survey on the feelings in the construction sector was just as divided.

And the winner, without further ado, is Optimism but only just!

Here are the full results:ConstructionPostBrexitSurvey

Since June 24th when the result was announced, things have changed quite dramatically. From the resignation of the Prime Minister, and as I write, the appointment of Theresa May as his replacement, the resignation of some of the key Brexiteers, and disarray in both of the main political parties.

The opposition is in the throes of what has been described as a coup.

And if you have dipped your toe into the water of social media of late, you can see extremely lively debate between friends. And in some cases friendships ending.

We have witnessed a mixed response from Europe. Signs from some suggest a desire to punish us, and conciliatory tones from others.

But what does this mean for construction? How optimistic or otherwise are those in the sector?

That’s what we sought to discover through our latest survey when we asked people to choose one of three options to describe their feelings for the sector following the Brexit decision:

A) I am hopeful

B) I am pessimistic

C) It is far too early to judge

With a narrow 1.2% margin, optimism scraped home.

So, What Do The Optimists Think?

One respondent, a building envelope specialist from Warwickshire wrote to us at great length, but seemed uncertain about his optimism levels.

He explains “Since the enormity of the result hit me I have oscillated between extreme pessimism and hopeful optimism in almost equal measures…interspersed by headscratching periods sitting on the fence. I have however settled on the hopeful optimism side of the fence…mainly on the basis that we have no real other viable option other than to let our industry and our economy fail.”

The tone continues with a building materials supplier from Buckinghamshire who would have preferred we remain, but is much more bullish about our prospects.

He commented: “Europe will need to pragmatic, even within a ‘punishment’ strategy they export more to us than they import. They need that trade and their product just got a whole lot more expensive. The UK just got a whole lot more competitive as we can sell for less. We are not going to stop building houses and infrastructure, we need them too much. We will have to become more resourceful with what we have, (historically we are good at this), as we will not be able to rely on cheap material imports. This in turn will help develop the UK economy. Still believe we should not have left.”

A contractor from Cambridge is simply confident in our ability to thrive in challenging conditions, saying: “Britain has always worked through adversities over the centuries and this will be no different, Brexit’s here now, bumpy ride, but we will deal with it.”

And Those Sitting On The More Pessimistic Side Of The Fence

Quite frankly, far fewer of those who chose the more pessimistic angle chose to comment. However, the unknown was a cause for concern for a Glasgow-based roofing contractor who said: “Uncertainty leads to reduction in confidence and therefore trade, construction is always the first to be affected.”

The performance of the pound has at least in the short term made exports cheaper, and imports more expensive – even before any talk of tariffs or freetrade is taken into account.

An architect from Brighton echoed this concern: “[I am] worried about all the good building materials we get from Europe [that are] not made here.”

Many Believe It Is Too Early To Judge

30.8% of respondents decided it was too early to make any real judgement. Perhaps wisely in the currently turbulent UK political scene, combined with the mixed messages from Europe.

A developer from Birmingham mixes his warnings with a dose of optimism however: “There will be some real tangible reasons why some deals fall away but this should be a short term blip along with the stock market drop and the devaluation of the £. The real danger lies in how the property industry reacts – what needs to happen as much as possible is business as usual – we are where we are so let’s just work with it and get on with making sure that we have a strong and thriving economy.”

“The ability to trade within Europe will not go away – there will just be slightly different terms so let’s just get on with it! If, as happened in the last recession everyone battens down the hatches and waits to see what everyone else does then we will soon find ourselves in another recession – and we don’t want that – do we?”

A facilities management company from Gloucester comments on the decision itself to explain his choice of ‘too early': “Because no one seems to have a clue as to what will happen. Will we end up back in a reformed Union? Can we negotiate to trade in the Single market without Free Movement (I expect not)? It appears clear that the Leave campaign was built upon a pack of mistruths, the Remain was probably more accurate in their predictions but again they overegged it to the point that they lost credibility and with it the vote.”

And succinctly, a building materials supplier from Cheshire says quite simply: “Wrong decision to come out – very angry about the situation.”

The Jury Is Still Out

While some feel strongly enough to veer on either the optimistic or pessimistic side of the fence already, the level of uncertainty is the only certain perspective right now.

It is clear the real direction will not be revealed until Article 50 is triggered and the negotiations begin with the EU. The weakness of the pound will in the short term create both opportunity and threats within construction. And with the current UK skills shortage, the free movement of people will pose a worry for those dependent on migrant labour if the flow is any way curtailed.

We can only watch this space!

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