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Brexit uncertainty leads to six-year low in construction confidence

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Delays to political decisions on projects due to Brexit have sent business confidence in the UK construction sector tumbling to a six-year low, it has been claimed.

While the purchasing managers’ index (PMI), compiled by IHS Markit, showed that Britain’s construction sector rebounded in October, it also showed that business optimism declined to its lowest level in almost six years. The PMI showed a reading of 53.2 in October, an increase from 52.1 in September.

IHS Markit economics director Trevor Balchin said: “Although total UK construction activity rose at a stronger pace in October, the underlying survey data paint a less rosy picture for the sector towards the end of the year.”

He added: “New contracts increased at only a modest pace, and firms were the least optimistic regarding the 12-month outlook for nearly six years.

“Construction companies again linked uncertainty to Brexit negotiations, which influenced delays to final decisions at clients.”

Confidence has also been hit by prolonged decisions on certain projects such as the Swansea Bay Tidal Lagoon. The £1.3bn energy project was scrapped earlier this year after the governmenttook 18 months to make its decision

Civil engineering activity rose at its fastest since July 2017, according to the figures. But house-building and commercial construction had slower growth.

However, despite the fall in confidence, construction firms have still taken on more employees, which according to Balchin, suggests “they are not expecting an imminent contraction in demand”.

The latest construction data also revealed a slower rise in new business volumes, for which firms cited tough competition and delays to decisions.

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