Warning signs as construction output flat-lines

Rising costs and continued uncertainty over Brexit are to blame for the slight drop in construction output, according to the Federation of Master Builders (FMB).

Commenting on the construction output figures for October 2018, published by the Office for National Statistics, Sarah McMonagle, director of external affairs at the FMB, said: “The UK construction sector is more or less flat-lining with a small decline of 0.2% in October compared with the previous month.

“Rising costs for large and small construction firms are contributing to the slight drop in construction output.

“Recent government statistics show that in the past year, there were nearly 3,000 insolvencies in the construction industry. While wages are continuing to rise because of the ever-worsening skills crisis in our sector, firms are also feeling the pinch because of the rising cost of materials. The depreciation of sterling following the EU referendum has meant key materials have become more expensive. We are expecting material prices to continue to squeeze the margins of construction firms with recent research from the Federation of Master Builders showing that almost 90% of builders believe that prices will continue to rise in the next six months.

“The future is still looking uncertain for the UK construction sector because the government has set out plans for a post-Brexit immigration system that would severely worsen the skills shortage. The government has said it will limit the number of low skilled workers entering the UK from the EU and further afield. This would include thousands of tradespeople, including bricklayers and carpenters, and these roles are ones that the construction sector relies on.”