Brexit – the only real certainty in the short term is uncertainty
Article 50 is now triggered. Two years of intense negotiations are set to follow, leading to, well, we don’t quite know what.
A ‘hard Brexit’ seems most probable, which creates significant uncertainty. We don’t know what trading terms will replace the single market. We don’t know how migration and the economy’s needs for skilled labour will be balanced. And some might argue that we can’t even be certain what the UK will look like by the end of the process.
So much uncertainty – which is generally not good news for markets, economies and businesses. And, as construction is often the bellwether for the wider economy, perhaps we’ll feel any impact sooner than most.
The fall in the value of the pound already seems to be feeding into higher inflation, which will undoubtedly affect economic growth.
With so many unknowns and so many diverse factors and interests to influence events, maybe the wisest course is to focus on what we know and what we can control.
If the economy starts to slow, being selective over new work commissions and customers isn’t easy – but it is probably wise. Staying in control through uncertain times is often about keeping your nerve and continuing to pursue the right opportunities.
Has Brexit affected the business outlook?
There has been much speculation in the press about our three main target sectors: commercial offices, education and residential. But while the total output may reduce, none will just stop.
Universities will continue to need renovation, new builds, and more student accommodation. New commercial projects may be slower to move forward in the medium term, but refurbishments will still happen as developers look for quicker and cheaper options to keep property portfolios occupied.
And the terrible shortage of affordable housing within London and the extended South East isn’t going away anytime soon.
Even the investment market surprisingly bounced back in the final quarter of 2016 from some initial Brexit jitters. Meanwhile, the fall in the value of sterling makes UK real estate very attractive for international buyers. There are opportunities as well as risks.
There are clearly several major issues, including the supply of labour from EU countries. Will trade in materials and products be subject to tariffs? Will the Brexit-related uncertainty and inflation destabilize the supply chain?
So what now?
My take is we need to park the uncertainty. Focus on delivering live projects and on converting schemes under negotiation into live jobs. By working even harder on key customer relationships and delivering innovation and value, construction businesses can expect a much smoother ride moving forward.
‘Nothing in the world causes so much misery as uncertainty’