Dive Brief:
- U.K. architecture firms are laying off staff and some companies have fully shuttered their practices, all part of the continuing fallout from the U.K. decision to exit the European Union, according to Dezeen.
- Piling onto the already-weak construction sector performance is the fact that a significant portion of new projects have been delayed as developers try to evaluate post-Brexit conditions.
- The U.K.'s Chartered Institute of Procurement and Supply (CIPS) reported July declines in construction activity at a pace not seen since 2009, with a stall in employment that ends three-and-a-half years of job growth.
Dive Insight:
Prior to the Brexit vote, U.K. construction industry activity had contracted 0.4% in contrast to a general 0.6% economic growth rate, so some architecture firms said they were already considering leaving London and viewed Brexit as "the straw that broke the camel's back," according to Dezeen. Since the June decision, however, British architects have come together to share ideas and make suggestions as to how industry practices could change to better meet the demands of a post-Brexit environment.
As far as Brexit's effect on the overall U.K. construction industry, it now faces the prospect of higher building costs and a deepening of the current skilled labor shortage, as E.U. tradesmen will no longer automatically be able to work in the U.K. In addition, the fate of non-British managers and design professionals, estimated to represent 40% of Britain's AEC payroll, is up in the air.
The impact of Brexit has already been felt in the United States. The Federal Reserve's decision not to raise interest rates is widely considered to be a Brexit-influenced move, and the resulting low mortgage rates are expected to not only appeal to domestic homebuyers but to those investors looking to get out of the U.K. housing market. In fact, Quicken Loans reported a traffic uptick of 30% to its Rocket Mortgage website since the vote. According to Redfin, however, Brexit hasn't impacted U.S. real estate market fundamentals, so potential U.S. homebuyers shouldn't let it affect their purchase plans.