9th December Journal Column

By Richard Waterhouse, Chief Executive of NBS

It’s safe to say that the effects of the Brexit decision are still unfolding. Industry forecasts, like those produced by the Construction Products Association and Experian, suggest that whilst we are not heading for a recession, construction output has significantly diminished following the Brexit decision. But it seems uncertainty, rather than speculation about the ultimate form Brexit takes, is the root cause.
Current projections suggest that even though the economy is performing better than expected right now, the referendum result will be a downward pressure for at least the next two to three years.

Those who design buildings are often good predictors of what will happen to the broader construction industry. This is because design work is the earliest work; so, if it tails off, in time, so will construction output.
NBS wanted to understand the views of the design community and the results of our latest survey show how the industry is feeling after the Brexit decision. The survey, which we last ran in June and July found that the design community follow a pattern we have seen elsewhere; a sudden and pronounced dip immediately following the referendum result, followed by a bounce back.

Predictions for practices’ workloads have markedly improved. In July, only seven per cent felt their workloads would increase in the coming 12 months. That figure has risen to nearly a quarter (24 per cent), – the same number of those who expect a decrease. Yet, 42 percent anticipate no change at all.

The latest figures around projected staffing levels are more stable than those in July. A quarter anticipate staffing levels falling in the next 12 months. Yet 19 per cent foresee growth, compared with only five percent in July. Almost half predict no change in their staffing levels, no growth or the increased output that we desperately need, but also no falls- so we can’t really complain just yet.
Designers are now less negative than they were immediately after the decision. The number expecting the industry to shrink is still high, at 44 per cent, but that has fallen a lot from 61 per cent. Whilst people are less pessimistic about the year to come, the immediate effects of the Brexit decision are being increasingly felt. Back in July, one in five had had a project cancelled, that figure has now risen to a quarter. Of those who have had projects cancelled or put on hold, those projects account for, on average, 21 per cent of current projects. That said, seven per cent have had projects re-instated that were put on hold after the referendum result, so we might be down, but we’re certainly not out!

When reading people’s comments, there remains a significant, and at times heartfelt, divide between those who favour our leaving the EU and those who do not. But we are also beginning to see a more rounded assessment of the future, which is what we’ve wanted since the decision was announced, nobody likes the fear of the unknown especially when the industry is at stake. All we do know is that we will be leaving the EU, but what form that exit takes is unclear and very important. The next few years will be very interesting to say the least.