Scottish builders ‘in a state of limbo’ amid political uncertainty

Vaughan Hart
Vaughan Hart

Scottish building contractors continue to be a little more positive about future business prospects though many have warned political uncertainty will be negative for the sector, a survey has revealed.

The Scottish Building Federation’s latest quarterly monitor, which asked employers to rate how confident they feel about the prospects for their business over the next 12 months compared to the past year, showed that industry confidence has remained steady at +2 for a third consecutive quarter.

Around 43% of respondents report seeing the number of people they employ rise over the past 12 months compared to 20% who reported a decline. The remaining 37% have seen no change in the size of their workforce over that period. 41% expect the size of their workforce to increase over the next 12 months, while 14% expect they will have to reduce the number of people they employ and 43% expect employment within their businesses to remain stable.

A total of 19% of respondents expect overall industry employment in Scotland to continue to decline slowly over the next five years while 17% expect it to rise to around 200,000. One third of employers responding to the survey expect total Scottish construction jobs to remain stable at around 175,000 while the remaining 30% are unsure how industry employment will perform over the next five years.

The marginally positive rating for overall confidence comes after it slumped to -19 at the end of June, immediately following the UK referendum vote to leave the European Union.

confidence rating 2However, the negative sentiment regarding business prospects amid the uncertainty of Scotland’s future as part of a larger political union seems to have remained.

Employers were also asked to rate a series of future scenarios in terms of their likelihood of happening and the potential impact they might have on the Scottish construction industry.

Brexit is rated as the most likely scenario to happen, rated as ‘very likely’ or ‘somewhat likely’ by 82% of respondents. But 40% of respondents do not know what the impact of Brexit will be on their business – and 42% are unsure what impact leaving the European Union will have on the wider industry. 33% predict that Brexit will have a negative impact on the Scottish construction sector compared to 16% who think it will have no impact and 9% who think the impact will be positive.

Elsewhere in the survey, 58% of respondents predict that fragmentation and a trend towards more self-employment within the industry will have a negative impact on their business. 67% of respondents think an increase in public funding for housing will have a positive impact on the industry as a whole.

Meanwhile, 59% fear that the growth of project management companies and a trend towards outsourcing labour rather than providing direct employment will have a negative impact on the industry overall.

confidence ratingCommenting on the survey results, Scottish Building Federation managing director, Vaughan Hart, said: “Looking at this latest set of results, there is a real sense that the industry remains stuck in a state of limbo just now. The recent economic signs have been positive with strong output and rising employment within the Scottish construction sector. At the same time, ongoing uncertainty on the political and constitutional fronts is making industry employers feel quite nervous about the future outlook.

“In terms of future trends, most building employers judge that prioritising additional public investment, particularly towards housing, would bring the greatest benefit to the industry and to their businesses. Conversely, a general fragmentation within the industry and a growing trend towards self-employment poses the greatest threat to future industry prospects. Moves away from direct employment towards project management companies that outsource their labour is also viewed as a negative development that will hamper sustainable industry growth in the future.”

Vaughan Hart added: “Our general message to Government and to politicians across all parties continues to be that the more certainty and stability they can provide, the more confident construction industry employers will feel – and the stronger position they will be in to boost employment and to generate output that benefits the economy as a whole.”

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