Brexit vote takes Scottish builders’ confidence to three year low
30 June 2016
Confidence amongst Scottish construction employers has fallen by 22 points to MINUS 19. This is the headline finding of the latest Scottish Construction Monitor, a quarterly survey of the membership of leading industry trade association the Scottish Building Federation, which consists of hundreds of building companies located throughout Scotland, from Orkney to the Borders.
There have already been signs of declining confidence within the industry over the past 12 months with the industry confidence rating recorded by the quarterly survey sliding from a record peak of PLUS 35 in the second quarter of 2015 to PLUS 3 in the first quarter of this year.
However, this is the first time since the second quarter of 2013 that the Scottish Construction Monitor has recorded a negative overall confidence rating from industry employers.
Survey responses were collected during June and respondents were given the opportunity to update their confidence rating following the outcome of the EU referendum vote on the 23rd June.
The previous quarter’s survey asked SBF members what they thought would be the impact of the UK leaving the EU for their business. Almost one in three predicted that the impact would be negative, compared to 8% who thought the impact would be positive.
Commenting on the survey results, Scottish Building Federation Managing Director Vaughan Hart said:
“The results of our latest quarterly survey reflect much of the informal feedback I have received from individual members. Construction employers are unsettled by the economic volatility we have witnessed following the vote to leave the European Union last week.
“General uncertainty about the economic outlook has prompted concern that investment decisions could be postponed indefinitely. The potential impact on interest rates also risks provoking a sustained slowdown of activity across different sectors of the property market. If the current economic volatility is sustained over a longer period of time, the UK Treasury may be forced to take evasive action come the time of the autumn statement with a knock-on impact on the Scottish Government’s budget and on local government funding.
“There is also a more general concern that the process of negotiating the UK’s withdrawal from the European Union could result in paralysis within Government that means important priorities such as the delivery of more housing, the development of skills, training and apprenticeships and critical improvements to the country’s infrastructure risk being sidelined.”
Vaughan Hart concluded:
“On behalf of the SBF’s membership and the wider construction sector, I would seek reassurance from ministers that it will maintain a focus on policies that support the construction industry at this challenging time – and critically that help to deliver sustainable employment within the industry. I would also urge politicians to keep the construction sector and the wider business community regularly briefed of further developments as the process of implementing last week’s referendum result takes shape.”
Notes to Editors
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1. Scottish Building Federation (SBF)
The SBF promotes the interests of the construction industry to a diverse range of stakeholders and is the leading employers’ federation for the industry, representing hundreds of companies from Orkney to the Borders.
2. Scottish Construction Monitor
65 Scottish construction firms completed the survey online or by post between the 6th and 29th June 2016. Respondents were given an opportunity to update their response following the EU referendum on 23rd June. Businesses were categorised in terms of size (no. of employees and turnover).
3. Business Confidence Index methodology
The Scottish Construction Monitor is calculated from the responses to the following:
“Overall, how would you describe your confidence in the economic prospects facing your business over the next 12 months, compared to the previous 12 months?”
A score is applied to each response as shown below, and an average score calculated:
|Much more confident||+100|
|Slightly more confident||+50|
|Slightly less confident||-50|
|Much less confident||-100|
Using this method, a Confidence Index of +100 would indicate that all survey respondents were much more confident about future prospects, while -100 would indicate that all survey respondents were much less confident about future prospects.