Infrastructure spending fell by 20% following Brexit, official figures show

Spending on infrastructure has dipped dramatically since the UK’s Brexit vote in June. According to figures from the first full month after Brexit, the value of construction contracts for July dropped by 20% to £1.5bn compared to June based on a three month rolling average.

According to the August edition of the Economic & Construction Market Review from industry analysts Barbour ABI, new construction orders were also down to £5.8 billion in July, a month on month drop of £400m. Along with infrastructure, the other prominent sector in construction was residential, which saw a decrease of seven per cent in contract value and a drop of 2,000 units compared to the previous month.

Commenting on the figures, Michael Dall, lead economist at Barbour ABI, said: “In the first full month since the vote to leave the European Union, the value of construction projects reaching contract award stage declined in July. This is unsurprising given the uncertainty in the economy. However, it is the infrastructure sector which has performed particularly poorly this month and with the change in narrative from the current government, it puts more emphasis on any fiscal stimulus that they may be planning to make.”

Industry leaders will be hoping that prime minister Theresa May’s pledge to put infrastructure investment at the heart of post-Brexit economic policy will be backed up by concrete announcements over the coming weeks. However, doubts and anxiety remain over the stalled Hinkley Point project and continuing uncertainty over airport expansion plans.

May’s strong signal that the government will ditch the previous administration’s austerity plans will give the industry some hope that the chancellor Philip Hammond will soon announce major investments in large scale projects, especially in the Autumn Statement.

Despite the disappointing news on infrastructure spending, it wasn’t all doom and gloom for the industry, as the value of contracts for commercial office construction in July increased by 22 per cent compared with June, worth a total of £648m on the month. £250 million of that total came from the West Midlands development Paradise Circus, an eight storey office block.

The industrial sector also performed well in July with its value the highest it’s been so far in 2016, reaching £564m, greatly helped by the commissioning of Reckitt Benckiser £100 million new global centre for scientific excellence in Kingston upon Hull.

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