Workloads have slowed across all sectors of the construction industry as Brexit delays investment, according to the Q2 2017 UK RICS Construction and Infrastructure Market Survey. Anecdotal evidence from respondents suggests that uncertainty regarding Brexit is weighing on investment decisions, alongside the political turmoil generated from last month’s general election.

A modest slowing

After a positive picture in the Q1 survey with the growth in workloads accelerating at its strongest pace since the referendum, there has been a modest slowing in Q2 2017 with private commercial and industrial sectors seeing the most significant easing in activity.

That said, a net balance of 29% of contributors continue to report a rise in private housing activity.

Although growth in total workloads has slowed in the sector, it is still rising, with 21% more respondents reporting an increase (down from +27% recorded in the previous quarter). Expectations for the next 12 months also remain relatively positive, although respondents appear noticeably less optimistic on their profit margins.

Infrastructure in focus

Infrastructure workloads remain broadly unchanged, with roads, rail and energy expected to see the strongest growth in output over the coming 12 months. Two areas of the UK that are seeing activity continue to rise are the Midlands and East Anglia, where activity has been boosted thanks to a surge in infrastructure.

Respondents in all other parts of the UK report a fall in workloads.

Looking back at the national picture, in the two sectors with the most significant easing, 21% more respondents saw their workloads in the private commercial rise rather than fall in Q2, down from 31% in the prior quarter. Private industrial activity also eased to 15% from 22% previously.

The more uncertain outlook for the economy as a whole has led to a less optimistic outlook for the sector over the year ahead; even so, 44% more contributors expect activity to rise rather than fall. This is down from 53% the previous quarter. Likewise, only 29% more contributors now expect to see employment rise rather than a fall, compared with an average of 32% over the four previous quarters.

Financial constraints

Financial constraints are reported to be by far the most significant impediment to building activity, and with a net balance of 79% (from 70% in Q1) is the highest reading in four years. Economic uncertainty driven largely by Brexit and the subsequent election result was identified as the primary cause of the constraint. Difficulties with access to bank finance and credit, along with cash flow and liquidity challenges, were the second and third most frequently cited reasons, respectively.

Despite the slowdown in growth, skills shortages persist with 55% of contributors reporting them as a constraint on growth. After having eased in 2016, the intensification of labour shortages appears to be biting once more. The lack of quantity surveyors and bricklayers appears to be particularly acute, but the shortfall extends to other construction professionals as well.

Tender price expectations over the next twelve months remain unchanged in Q2, with respondents envisaging greater price pressures. The expected increase in tender prices may signal rising costs and shrinking profit margins for businesses. Indeed, expectations on profit margins have eased from a net balance of 18% to 8% in the latest results.

Jeffrey Matsu, RICS Senior Economist said “Economic and political uncertainty appear to be weighing on sentiment, but all things considered, current conditions and year-ahead workload expectations are holding up rather well relative to the longer-term trend.

“Given the ongoing nature of Brexit negotiations, it remains to be seen what impact this will have on financial conditions or the availability of skilled labour to the industry.”

Staff shortages, a weak pound and a potential technological uprising are just some of the issues the construction industry is set to face in 2017, according to construction & rail recruitment specialist One Way.

An analysis by the leading construction and rail recruitment consultancy has outlined some of the major issues that the building industry is set to face over the next 12 months. This comes at a time when productivity has reached its highest point in nine months and a number of major construction initiatives, including the development of a new series of garden cities, have been given the green light.

We are in a very strong position coming out of 2016 and will be able to overcome these obstacles if we plan for them correctly.

Managing Director of One Way, Paul Payne, outlined the issues for buildingspecifier:

Staff shortages

“From our perspective this will be the big one. The number of skilled professionals operating in the industry dropped dramatically during the recession and now around 22% of the workforce are in their 50s or 60s. Quite simply, there are too many people retiring and not enough entering construction to replace them. With more projects being given the go ahead we need to see greater focus on promoting careers to youngsters and professionals looking for a change of career before we hit a point where productivity is being affected. This needs to happen sooner rather than later.”

A weak pound

“The strength of the domestic economy will naturally impact almost every field, but it could have a particularly damaging effect in construction. A weaker pound means that import prices rise and with so many of our raw materials being brought in from overseas, this could add significant amounts to the bottom lines of builders across the country. Currently, material costs are at their highest point in five-and-a-half-years and ultimately this could lead to them squeezing costs elsewhere, for example in staffing, or even having to pass on certain projects.”


“As has been incredibly well documented, no one really has any idea about what Brexit could entail or what sort of deal we’ll be left with once Article 50 has been triggered. However, if as expected, there are some changes to Freedom of Movement across the EU, then the likes of the construction industry which often relies on the skills of overseas workers, could be impacted by even worse skills shortages. Therefore increasing the numbers of people in the industry before this happens is more important than ever before.”

The rise of the robots

“The growth of AI has been more widely documented in fields like technology and financial services, but it is also having an impact on construction. Over the past 12 months or so we’ve begun to see the use of drones and other tech like 3D concrete printers become more widely adopted and it will be interesting to see the role they play by this time next year. Many have suggested that their growth could lead to jobs being cut, but realistically anything like this happening is way off in the distance. For the time being, technology promises to make many of our jobs easier, rather than taking them away.”