UK market intelligence Q1 2019: Brace for Brexit
Both construction and the wider UK economy ended 2018 with a set of growth figures that was anaemic at best, and worrying at worst.
The quarterly pace of GDP growth eased to 0.2 percent during the final three months of 2018, barely a third of the 0.6 percent rate clocked in the preceding quarter and little better than the 0.1 percent achieved in the deep-frozen first quarter of the year.
As a result, UK GDP grew by just 1.4 percent in 2018 as a whole, its weakest annual performance in six years.
The construction industry’s yo-yoing fortunes contributed to Britain’s economic slowdown. Construction output grew by a solid 2.1 percent in the third quarter, but the expansion slipped into reverse during the final three months of the year – which saw output fall by 0.3 percent.
Construction output for 2018 as a whole remained in positive territory, but the 0.7 percent growth achieved is the slowest pace seen since 2012.
Behind the national average, there are wide regional variations in performance. The most recent
ONS data – from Q4 2018 – shows that over the previous 12 months output contracted in nearly half the regions of mainland Britain. This loss of momentum, coupled with the lingering uncertainty of Brexit, has taken its toll on both business and consumer confidence.
'No-deal' Brexit remains a serious threat
The cliff edge has moved. But it is no less steep or perilous and the construction industry must act fast to contain the risks posed by a chaotic Brexit. In the end, the final countdown to the Brexit deadline brought delay rather than clarity.
While the short, eleventh-hour extension of the Brexit process gives the construction industry a welcome window in which to ramp up contingency plans, neither the severity nor the urgency of the challenges we face has eased.
Despite Parliament’s vote to rule out a ‘no deal’ Brexit, MPs’ repeated rejection of the Withdrawal
Agreement - and the lack of consensus for any single alternative – may paradoxically make it more likely the UK will eventually leave the EU without a deal.
Britain’s extreme political uncertainty means calculating the exact probability of a ‘no deal’
Brexit is all but impossible. But one thing is clear – a chaotic exit would have serious cost and delay implications for both clients and the supply chain.
At this critical stage on the road to Brexit, conjecture and theorising are no longer an option. Clients need instead to focus on business continuity in their programme or project, activating a Brexit mitigation strategy that is proven and evidence-based.
Download the report to read more about the UK economy and construction industry, see key data and find out how you can manage the risk of a ‘no-deal’ Brexit.