Private sector keeps Scottish construction buoyant after Brexit vote

Kier construction stockOutput from the Scottish construction sector seems to have remained buoyant during the three months immediately following the UK referendum vote to leave the European Union, new official figures suggest.

New figures published today by the Office for National Statistics (ONS) found that output in the Scottish construction sector during the third quarter of 2016 was £3.7 billion, down marginally on the same period in 2015, when total industry output was worth £3.9bn.

However, output from the private housing and private commercial sectors and from repair and maintenance were all up compared to the third quarter of 2015, helping to offset a decline in infrastructure output, down from more than £1bn in Q3 2015 to £722 million during the three months to September this year.

Commenting on the new figures, Scottish Building Federation managing director, Vaughan Hart, said: “These new figures suggest that the Brexit vote has had no immediate effect on the performance of the Scottish construction sector. It’s encouraging to see output from the private sector on the rise compared to the same period last year.

“We anticipated a slowdown in infrastructure activity as major projects such as the Queensferry Crossing draw to a close. More concerning is an ongoing slump in private industrial output with the removal of empty property rates relief having a negative impact on that sector of the industry. Future performance will depend on the wider picture for Scotland’s economy.

“With the Finance Secretary due to present his budget for 2017-18 next week, we will be looking for signs of a further boost to capital spending as a consequence of the commitments made by the Chancellor in his Autumn Statement. That should help to keep the construction sector in reasonable health as we look ahead to 2017.”

In the UK as a whole, construction output was estimated to have decreased in October 2016 by 0.6 per cent compared with September 2016. All new work decreased by 0.9 per cent, with the largest downward contribution coming from infrastructure, while all repair and maintenance showed no growth.

Compared with October 2015, construction output increased by 0.7 per cent. All new work increased by 2.9 per cent with repair and maintenance falling by 3.2 per cent. Within all new work total new housing was the biggest upwards contribution with an increase of 12.6 per cent.

Kier Construction Scotland’s business development manager, Gordon Reid, said: “This month’s ONS stats sees a further drop in output compared to the previous month and there is no doubt that output figures for the construction industry as a whole have been fluctuating throughout the year, but at Kier Construction Scotland, we can look back on 2016 as a good year. Despite political and market uncertainty, we have successfully grown the business, our head count and our order book and secured a strong pipeline of work for next year.

“As well as delivering major build projects across our core sectors of education, healthcare, commercial and retail, 2016 has seen us develop our expertise of working on prestigious heritage projects. Our delivery at the Glasgow School of Art, Edinburgh College of Art and Aberdeen Music Hall, has brought a diverse range of skills to the restoration and refurbishment of these historic buildings.

“Looking ahead to next year, there are plenty of opportunities for the construction sector and the government’s commitment of an additional £800m capital spending for infrastructure projects in Scotland over the next five years delivers what could be viewed as an early Christmas present to this important industry.”

Allan Callaghan, managing director of Cruden Buildings and Renewals, added: “In the midst of what’s been an uncertain year for the construction sector, Cruden has focused on growing organically and delivered a strong set of financial results, totalling 18 years of continuous profit.

“A priority for the industry for the year ahead must be to address the ticking time bomb of skills shortages that prevails right across the sector. Every contractor has a responsibility to help tackle this issue and at Cruden, we are playing our part with our successful modern apprenticeship programme. We have around 50 young apprentices at any one time and this month alone, fifteen young people have just completed their training and we expect to retain the vast majority of them.

“As well as a securing our own pipeline of talent, we have also secured a pipeline of activity for the year ahead. I’m also encouraged by the determination of the Scottish Government to deliver on their pledge to see 50,000 affordable homes being built across Scotland by 2021. So as 2017 approaches, I’m optimistic about the health of the construction sector for the year ahead.”

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