Tom Hall, Chief Economist at AMA Research was part of a panel debate on the main stage at UK Construction Week on Wednesday 9th October. The panel, chaired by BBC’s Steph McGovern, debated the current economic situation in a session called ‘Brexit – Boom or Bust? Industry economic forecast 2020’. Together with Tom, the panel included Professor Noble Francis, Economics Director from the Construction Products Association (CPA) and Lord Digby Jones, Cross Bench Peer and businessman from Digby Jones LLP.
This report, published straight after the debate, provides ……
….. an informed and up-to-date situation analysis designed to provide readers with insight into the likely Brexit outcomes and their impacts on the UK economy. It will also assess the probable impact on the manufacturing and construction industries and propose mitigations to minimise disruption where possible.
Understanding possible Brexit outcomes
- In the first section, four potential Brexit scenarios are outlined, gathered from the Bank of England’s and others’ publications.
- Two scenarios are outlined where the UK leaves the EU with a deal: a “close” and a “less close” scenario. Both do not result in major economic impacts over the near term, as the changes are proportionately applied.
- We consider the “less close” scenario a more realistic representation of the UK government’s proposed future relationship.
- Two no-deal scenarios are also proposed: a “disruptive” and a “disorderly” scenario. Both result in significant negative economic impacts resulting from the initial disruption to trade, and include secondary impacts which feed through into lower economic activity.
- Both scenarios show the UK in recession over the three quarters starting in Q4 2019.
Assessing the impact for construction and manufacturing companies
- The impacts on the Construction and Manufacturing industries are then presented. Both short- and long-run impacts of both a deal and a no-deal Brexit are outlined.
- A discussion of the likely impacts of major construction materials and products is provided, with a high-level assessment of the probability and impact for use as a starting point in risk assessment.
Mitigating the Brexit risk
- Finally, a procedure to assess and mitigate the possible impacts for a construction or manufacturing company is presented, including risk analysis and risk mitigation.
- Several suggestions are provided for companies to consider across the range of a company’s activities to mitigate any disruption.
Overcoming Brexit Uncertainty – The Impact on the Construction and Manufacturing Sectors is available now and can be ordered here.
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