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News » Data » So what now? » published 22 Jul 2016

So what now?

With the post-Brexit machinations still being played out in the halls of Westminster and Brussels, what does life outside the EU mean for the UK construction sector? In the absence of facts, Neil Edwards looks at the figures

Ever since David Cameron announced that the UK would go the polls to decide the country’s future in or out of the European Union, there has been a sense that the construction industry has been holding its breath.

The number and value of contracts going out to tender have been on the slide since Christmas and the rolling annual total of contract awards is now 12% off its start-of-the-year high of £56bn.

Now that the referendum results are in it appears that the industry might just have to hold its breath for a bit longer. Uncertainly will continue to reign while the two main political parties squabble over leadership and the government hastily cobbles together the post-Brexit plan that it assumed wasn’t going to be required.

So while the politicians settle their personal differences and set the country on a course through the choppy waters that lie ahead, some of those sectors of the industry still holding their breath are likely to turn blue in the face.

Of course, the decision of 17.4 million UK citizens to cast the country adrift from its nearest neighbours came late in the month. And so, with £4.522bn of new contract awards recorded in the month of June, life outside the EU looks merely like a continuation of the norm.

In fact, the 700-plus contracts that made up that accumulated total during an especially long month could be read as an upturn on the previous month. But with many housebuilders having seen their share prices plummet by 40% or more in the aftermath of the Brexit decision, it would be premature – foolhardy, even – to suggest that all in the UK construction garden was rosy.

And as if the continued uncertainty of life in a post-EU Britain were not enough to give UK construction the jitters, we now have something else to worry about too. The largest single contract award of the past month – and one that propels a newcomer to the top of the Contracts League table – was won by Chinese-owned BCEGI Construction (UK).

That contract, for the construction of 2,000 new homes in Salford for Scarborough Group International, was valued at £700m, allowing the League Table debutant to outstrip its nearest rival by almost £500m this month.

Seizing second place this month with a five-contract haul reaching a combined value of £232m, was BAM. The largest of the company’s new contracts was a £160m deal for construction of a new office block at T2 Canal Reach in North London for Argent.

Narrowly beaten into third place with a combined total of £217.2m was Galliford Try, which was buoyed in particular by a £66m order secured by group company Linden Homes for the construction of 186 new dwellings in Sutton, Surrey.

Morgan Sindall Group did what Morgan Sindall Group normally does and secured more new orders (34 of them this month) than all its rivals. These wins secured Morgan Sindall the number four spot on the table with a £189.7m total. This included a £26m order for the construction of a new head office for private healthcare supplier BUPA at Salford in Greater Manchester.

Quite what the UK’s departure from the EU means for the nation in general and for construction in particular remains to be seen. But this last Contracts League table from an EU-era United Kingdom speaks for itself. Housing contributed £1.85bn of the £4.52bn total during June, and with housebuilder share prices among the worst hit by the Brexit result, the industry could be sailing into some very choppy seas indeed.

• Neil Edwards is chief executive of The Builders’ Conference


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This article was published on 22 Jul 2016 (last updated on 12 Aug 2016).

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