In Brief

Brexit blamed for shock construction slump

OECD warns UK has highest inflation rate of world’s top economies

Continuing uncertainty over the economy in the wake of the Brexit vote has been blamed for a shock fall in construction activity.

September’s figures mark the first time since before June 2016 the Purchasing Managers’ Index (PMI) has slumped to 48.1, below the 50 mark that separates growth from contraction.

 According to the PMI, civil engineering work suffered its sharpest drop since April 2013 and commercial development projects had the worst month since February 2013. Markit, which compiled the survey, also reported that confidence in the industry was at its weakest in four years.

“The construction sector is entering its own recession,” Samuel Tombs of Pantheon Macroeconomics told The Independent, adding that “the government’s shift to a more accommodating stance in Brexit talks has done little to convince builders that clients will sanction delayed projects soon.”

Although construction makes up just 6% of Britain’s economy, Reuters suggested “it was likely to drag on official third-quarter growth figures, just as the Bank of England gets ready to raise interest rates”.

Construction, which has long lead times for projects and relies heavily on labour from the EU, has been particularly affected by the Government’s lack of progress in the Brexit negotiations.

At just 0.3% in the second quarter of 2017, the UK has the weakest growth rate among the G7 – while also maintaining the highest inflation rate, according to the latest figures from the OECD.

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