Dive Brief:
- Consultancy group Barbour ABI has revealed that after the U.K.'s June vote to leave the European Union, July's infrastructure contract values plunged 20%, according to The Guardian.
- Total July construction orders fell to £5.8 billion, or $7.6 billion, a likely result of private investor uncertainty around a post-Brexit economy and government, according to Barbour ABI.
- As private investment in the U.K. construction industry shrinks, there is more pressure on the government to fill in the funding gap. New Prime Minister Theresa May has rejected the austerity program instituted by her predecessor David Cameron, so industry experts have some reason to believe she will increase government infrastructure spending, according to The Guardian.
Dive Insight:
Earlier this month, Dezeen reported that U.K. architects had begun laying off employees and even closing their offices as a result of Brexit. The impact of the vote exacerbated existing industry weakness, and new projects have been shelved as investors try to gauge its future effect on the economy. The U.K.'s Chartered Institute of Procurement and Supply also reported a dip in July construction figures, stating that declines were on par with those in 2009 and that Brexit had caused a stall in employment growth after three-and-a-half years of gains.
Experts also said that as a result of Brexit, the U.K. construction industry must now prepare itself for higher building costs and more skilled labor shortages because it no longer has unfettered access to European workers. Firms must also sort out the status of their non-British managers and design professionals, thought to represent approximately 40% of Britain's AEC industry payroll.
In the U.S., the Federal Reserve's June decision not to raise interest rates was thought to be a Brexit-influenced action. Consequently, continuing low mortgage rates in the U.S. could encourage domestic homebuyers to pull the trigger on a purchase, as well as appeal to foreign buyers looking for investments outside of the U.K. According to Redfin, while Brexit hasn't impacted U.S. real estate market fundamentals, the resulting fluctuations in the stock market have helped to cool luxury home sales and prices.