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Scrutinising the Autumn Statement



Against the backdrop of Brexit, today’s Autumn Statement was much anticipated. Ahead of its announcement, the predicted impact of the EU Referendum result, “JAMs” - those “just about managing”- and infrastructure were all hot topics.

So, what did Philip Hammond actually cover and were there any surprises?

As expected, there were no grand giveaways, but a clearer picture of the nation’s economic future was painted. With borrowing up, growth down and a £122bn black hole caused by Brexit, the Chancellor’s statement focused on the long-term future of the UK, its economic interests and, crucially in a post-referendum world, how the Government plans to keep Britain as the “number one destination for business”.

Alongside its renewed pledges to cut corporation tax, productivity and infrastructure were cornerstones of the Chancellor’s statement. To illustrate the need to invest, Hammond used the analogy that “it takes a German worker four days to produce what we make in five; which means, in turn, that too many British workers work longer hours for lower pay than their counterparts.”

With more than £1bn ringfenced for digital infrastructure and the Government also offering business rate relief on new fibre infrastructure from April 2017, small businesses and those in rural locations will benefit, making them more competitive in an increasingly globalised market.

While the £1.1bn extra investment in local transport networks is a positive step, it actually only represents 0.08% of GDP and still leaves us lagging behind other developed nations when it comes to spending on infrastructure. If an industrial strategy is to be delivered successfully, it needs significantly more financial investment and a focus on how we address the skills shortage in the built environment sector.

One of the most important announcements came in relation to the Northern Powerhouse, so much so that it was trending on Twitter throughout the statement announcement.

£1.8bn will come from the Local Growth Fund to English regions, giving businesses outside of the capital a financial boost. The North has been allocated £556m, with the aim to improve productivity and infrastructure to support the Northern Powerhouse strategy. While the investment is positive and fits into the long-term strategy to reduce the gap between London and northern cities, it’s important to note that infrastructure investment remains low as a percentage of GDP.

There was good news for the construction industry, with a pledge to invest a further £1.4bn to deliver 40,000 additional affordable homes and a £2.3bn Housing Infrastructure Fund, which aims to unlock land over the coming years. With more and more people struggling to get on to the housing ladder, this has been welcomed by many, while also giving a boost to businesses operating in the housing sector.

So, what is the verdict overall?

For business, there are some real positives, particularly from an investment and innovation point of view. Boosting productivity and improving infrastructure could help to protect the UK’s long-term growth ambitions and, crucially, raise the standard of living for millions.

However, at the same time, the skills shortage in the construction sector remains and needs addressing urgently, while pressure on public services could ultimately undo any of proactive, business-centric policies. With two thirds of NHS trusts reporting deficits, the Government cannot ignore the failing health of our health service for much longer.

It will take time to see the results from this latest round of announcements, particularly those around infrastructure, but one thing is for sure, there will be some bumps in the road to economic recovery.

 

Tagged with: Autumn Statement, Brexit, Built Environment, Construction, Housebuilding, Infrastructure, opinion, Politics, Productivity

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Exactly how hard has the Brexit vote hit the construction industry?



It’s been over four months since the British public headed to the polling stations to cast their vote on EU membership. Having worked in Refresh PR’s B2B team for a year now, my vote in the referendum wasn’t one that would solely affect my personal circumstances. We specialise in construction and the built environment, so a great deal of time pre-vote was spent speaking with our clients about how a ‘leave’ result might impact their company.

 

There was of course uncertainty around how it could potentially affect our business, too.

 

This was thanks, in large part, to the media but also the undeniable – and well publicised - reliance on our EU membership to bring materials, contracts and tradesmen to the UK. Four months down the line, and the headlines are no less confusing. Some claim businesses are booming, while others are apparently facing an uphill struggle to survive and continue securing business.

 

Only last week news emerged of Travis Perkins, one of the UK’s leading construction merchants, having to close 30 stores and lose 600 jobs as a pre-emptive measure in anticipation of ‘an uncertain UK outlook in 2017’.

Similarly, last week Telford-based rail freight firm DB Cargo announced redundancy consultations on 893 jobs throughout the UK. The company made significant losses during 2015, long before the EU vote, but has said: “Since the Brexit result, investment decisions relating to major construction and infrastructure projects have been delayed, or cancelled in some instances, meaning some of our construction customers are reviewing their future demand for transport of materials.” The more you read, the more worrying it sounds.

According to the Office for National Statistics, construction output dropped 1.5 per cent in August, putting the sector on course for its worst quarter in four years. However, experts insist the figures are in absolutely no way related to the Brexit vote.

Indeed, t
he October edition of the Economic & Construction Market Review from industry analysts Barbour ABI, revealed the residential sector played a prominent role in stabilising construction figures during September. House prices are stable and mortgages are lower than ever, collectively playing a big impact on sector contracts, which reached £5.6bn in September.

Performing similarly well is the hotel, leisure and sport industry, with construction contracts in the sector valuing over £500m – 99 per cent higher than a year ago.


So what is the truth, and what do the people working in the industry have to say about it all? A survey undertaken by merchants Gibbs & Dandy with builders, joiners, electricians, plumbers, and painters and decorators revealed more than two thirds (69.5 per cent) are optimistic about the future, while only 12 per cent are pessimistic. Furthermore, 14 per cent have seen an increase in work, while 84 per cent reported that their workload is about the same as before the vote.

Is it purely a cautious attitude and scaremongering media that’s dampening outlook within the sector?

Comfort surely came for many this weekend in the form of positive forecasts, which show the British economy as a whole is performing better than predicted in the immediate aftermath of the vote. GDP was expected to grow by 1.8 per cent in 2016, but has been so resilient experts instead anticipate growth of 1.9 per cent. Similarly, wage growth is expected to stay steady at 2.4 per cent until at least the end of 2017.   

With Prime Minister Theresa May last week demanding the UK continues to play a full role in the EU and its decision-making until we officially leave, it’s up to construction experts to seize the opportunity and these more positive forecasts, and – during what could turn into a two-year charade – use the time we have today to start protecting the future of their business. The construction industry really is stronger together.

 

 

 

 

Tagged with: Brexit, Construction, Politics, PR