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Published on : Sep 30, 2016

ALBANY, New York, September 30, 2016: The expected impact of UKs exit from the European Union on the country’s construction sector is analyzed in a recent report added to the portfolio of ResearchMoz.us. The report is titled “Construction in the UK - Key Trends and Opportunities to 2020.” 

A great deal of uncertainty still remains about the complete implications of this move on the UK construction industry. However, the report estimates that there are vast downside risks to the market’s growth prospects and few chances of an upside during the early phase of the period between 2016 and 2020.

One of the first major implications of UK’s exit from the EU is an expected slowdown in the country’s economy accompanied by a decline in the value of its currency. The report states that the construction industry will shrink in terms of output value in 2016. The decline in the output mirrors both the weakness in the sector in the first half of the year ahead of the Brexit poll and the projected slowdown during the second half as investment plans stall owing to the economic uncertainty. 

The UK construction industry is, however, expected to recover by the second half of the forecast period, with the growth pace still remaining sluggish and averaging 1.7% per year in terms of output. Over the forecast period, the industry is expected to exhibit a 0.82% CAGR as compared to the 1.39% CAGR registered over the period between 2011 and 2015. Although the growth prospects of the UK construction industry look bleak presently, it is expected to gain strength from investments in infrastructural, institutional, and residential building projects in the next few years.

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Government plans and programs such as the Priority School Building Program (PSBP), the National Infrastructure Plan (NIP), and the National Health Service (NHS) program are projected to help the industry gain sustainable development. Additionally, the government’s plan to invest in the development of affordable homes for low-income groups, replacement of the country’s aging and inefficient energy infrastructure, and renovation of old school buildings will also provide the industry some support.

The industry can expect substantial gains from the government’s plans to improve the country’s electricity infrastructure and enhance rail network connectivity and capacity, for which funds of nearly US$107.0 bn and US$62.5 bn, respectively, have been allocated. Hopes are also high on the expected financial budgetary benefits the country could gain by saving the annual membership fee, of nearly US$11.1 bn, necessary to stay in the European Union.

The UK construction industry is also expected to suffer from its high reliance on foreign labor from other countries in the European Union. The shortage of existing as well as next skilled domestic resources will potentially increase labor costs and delay projects in the UK in the near term. The Chartered Institute of Building has warned that owing to the Brexit referendum, stringent regulations regarding migration will sizably damage several construction activities in the country.

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