Middle market construction businesses are the most upbeat about the impact of Brexit on their business and the UK economy, according to the latest YouGov survey commissioned by leading audit, tax and consulting firm RSM.
RSM’s quarterly Brexit Monitor index, in which any reading above 100 indicates that businesses are more optimistic than pessimistic, showed that sentiment with the construction sector towards the prospects of the UK economy over five years rose from an index score in March 2018 of 123 to 134 this quarter. This was the highest index score among all UK sectors, while consumer recorded the lowest score at 103.
Construction businesses also recorded a highest score among all sectors of 134 when asked about their business in the longer term. This is a marked increase from a negative score of 99 in September 2017 to the most optimistic this month.
However, consumer businesses were more muted when asked about the impact of Brexit on their business over the next two years, registering a score of 122 on the index.
Construction businesses were also most confident when compared to other sectors in the government's ability to deliver a good Brexit deal. The majority (68 per cent) of construction businesses said they were confident** of the UK achieving a good deal, compared with only 9 per cent who weren’t confident. In addition, continued membership of the customs union is clearly a priority for the sector as 71 per cent agreed that this would be beneficial to their business. This was also the highest score of all sectors.
In addition, almost two fifths of middle market construction businesses see increasing local recruitment as the top priority to feel adequately prepared for Brexit, with expanding into non-EU markets (13 per cent) and reviewing legislation of hiring EU nationals (10 per cent) completing the top three actions for business continuity post-Brexit.
Kelly Boorman, head of construction at RSM said: ‘It’s great to see construction business coming out on top as the most optimistic sector ahead of Brexit. This uplift in positive sentiment could be due to more clarity around the status of EU citizens currently living and working in the UK, which is clearly a top priority for the sector.
‘However, with an ageing workforce approaching retirement, the UK construction market could face a real challenge as a result of Brexit to access the right skills. If uncertainty or more restrictive parameters for EU citizens to work in the UK are implemented, then the war in talent will intensify; which will push up costs.
‘Companies should be thinking ahead and coming up with creative ideas for plugging the skills gap. This could include engaging with schools and colleges to encourage more students to study STEM subjects, increasing apprenticeships, reforming talent management and training programmes and embracing technology.
‘However, this sentiment does contradict rising fears that the UK government is losing ground in its bid to secure a deal that is in the best interests of the UK. There remains a real frustration, and the sector will no doubt be looking for more clarity following this week’s EU council summit to ensure it is effectively prepared to prosper post-Brexit.’
*The survey was taken between 18 May and 11 June 2018
**Respondents were asking to rate their confidence on the UK’s prospects of securing a good deal on a 0-10 scale, where 0 is ‘very unconfident’ and 10 is ‘very confident’.
‘Confidence’ is calculated as the net score of respondents saying between 7 and 10.
348 interviews with C-suite respondents from mid-market firms (with turnovers between £30-£300m) across manufacturing (54), financial services (63), technology, media and telecoms (53), construction (60), consumer (66) and other markets (52) were completed between 19/02/18 and 08/03/18.
RSM’s quarterly Brexit Monitor Index is based on a scale of 0-200 (where 0 represents a strong negative impact, 100 a zero impact and 200 a strong positive impact).
Short term is defined as two years, whilst long term is defined as five years.