United Kingdom Infrastructure Report Q3 2016 - New Report Available.
Brexit will have far - reaching implications for the UK construction sector. Overall , in the short term these implications are negative, with investment decisions from the private sector to be put on hold, while the government has entered a period of instability which could delay vital project decisions. For Q316 we have downgraded our forecasts for the overall construction industry largely on the back of the residential and non-residential building sector and will look to make further downgrades to the infrastructure sector when the impacts of Brexit are clearer.
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We have lowered our growth forecasts for the UK's construction industry for 2016-2018 following the referendum vote to leave the EU. We now forecast 1% y-o-y real growth in 2016, falling to just 0.4% in 2017. The non-residential building sector will be the hardest hit by Brexit, in particular commercial and industrial real estate. Several major infrastructure projects are yet to be fully factored into our forecasts due to slow progress on investment decisions which will be exacerbated by Brexit, but the UK retains Europe's largest infrastructure project pipeline.
From a private perspective, the UK will remain an attractive market for infrastructure investment; however, the uncertainty surrounding changes to regulatory legislation and impact on the economy of Brexit will likely result in investments stalling. This will particularly be the case in the power and water sectors, which are heavily regulated and already experiencing a lull in investment.
The UK has fallen significantly down the rankings in our Infrastructure RRI for Western Europe and North America in Q316, with a score of 69.8.
This is a result of a reduction of rewards on offer in the market over the short term following the Brexit decision. The large size of the UK's construction sector is not a enough to maintain its high score following our downward revisions to the market's growth outlook. The country achieve an Industry Rewards score of 52.5.
The UK still scores well in global terms in the Country Rewards Index, with a score of 88.9. The UK has a long established and strong financial market, which is ideal for the infrastructure industry's need for long-term capital.
The United Kingdom Infrastructure Report features BMI Research's market assessment and forecasts covering public procurement and spending on all major infrastructure and construction projects, including transportation and logistics by land, sea and air; power plants and utilities, and commercial construction and property development. The report analyses the impact of regulatory changes and the macroeconomic outlook and features competitive intelligence on contractors and suppliers.
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|Date:||Jul 19, 2016|
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