The IHS MARKIT / CIPS UK CONSTRUCTION PMI® shows that UK construction has fallen for the first time in eleven months with Brexit uncertainty partly to blame. Anna Tobin reports

Following ten months of sustained expansion in the UK construction sector, UK construction companies reported to the IHS Markit/CIPS UK Construction PMI that business activity levels had fallen in February. This drop has been put down to reductions in commercial building and civil engineering activity, and anecdotal evidence from survey respondents suggesting that Brexit uncertainty has slowed decision-making on commercial projects and led to subdued client demand so far this year.

The survey found that suppliers’ delivery times have lengthened to the greatest extent since last August and some firms felt that that stockpiling by UK manufacturers had resulted in shortages of transport availability and led to longer wait-times for construction products and materials.

“The UK construction sector moved into decline during February as Brexit anxiety intensified and clients opted to delay decision-making on building projects,” said Tim Moore, economics associate director at IHS Markit. “Risk aversion in the commercial sub-category has exerted a downward influence on workloads throughout the year so far. This reflects softer business spending on fixed assets such as industrial units, offices and retail space. The fall in commercial work, therefore, hints at a further slide in domestic business investment during the first quarter, continuing the declines seen in 2018.

“There were also reports that the more fragile housing market confidence has begun to act as a brake on residential work, which adds to signs that house building has lost momentum since the end of last year. This leaves the construction sector increasingly reliant on large-scale infrastructure projects for growth over the year ahead.

“Construction companies pared back their purchasing activity in response to subdued demand in February, but delivery delays for inputs were among the highest seen over the past four years. Survey respondents noted that stockpiling efforts by the UK manufacturing sector had an adverse impact on transport availability and supplier capacity across the construction supply chain.

“On a more positive note, input price inflation held close to January’s two-and-a-half year low. The slowdown in cost pressures from the peaks seen in the first half of 2018 provides a signal that the worst phase has passed for supplier price hikes related to sterling depreciation.”

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A survey of 1,200 company directors by the Institute of Directors (IoD) has found that 29% feel that they may have no choice but to shift operations abroad as a result of Brexit. Anna Tobin reports

The survey of 1,200 IoD company directors found that 16% had already put relocation plans into action or were in the process of doing so and a further 13% are actively considering doing so. It’s not just big business taking this action either. Many large companies were found to have already moved their operations, and small businesses were found to be almost twice as likely to be actively considering the prospect.

The report found that two-thirds of exporters to the EU are looking to relocate overseas, and 40% of IoD members who are engaged with contingency planning have explored moving operations.

“It brings no pleasure to reveal these worrying signs, but we can no more ignore the real consequences of delay and confusion than business leaders can ignore the hard choices that they face in protecting their companies,” says Edwin Morgan, interim director general of the IoD. “Change is a necessary and often positive part of doing business, but the unavoidable disruption and increased trade barriers that no-deal would bring are entirely unproductive.

“While the actions of big companies have been making headlines, these figures suggest that smaller enterprises are increasingly considering taking the serious step of moving some operations abroad. For these firms, typically with tighter resources, to be thinking about such a costly course of action makes clear the precarious position they are in.

“We still have a chance to stem the flow, and provide enough certainty to the firms that are considering moving but haven’t yet done so. The UK’s hard-won reputation as a stable, predictable environment for enterprise is being chipped away. Our political leaders must keep this in the front of their minds as we enter this critical phase of negotiations.”

There is information on how to set up a business in the EU in the Ready for Brexit Directory

The list of companies leaving the UK in the run-up to Brexit grows

In the lead up to Brexit, the list of companies that are moving their headquarters outside of the UK or are setting up additional companies in the EU is growing. Anna Tobin looks at who is going where

Dyson is the latest company to announce it is moving its HQ to Singapore, although it says that this is a strategic move unrelated to Brexit.

Japanese electronics’ manufacturer Panasonic is moving its European HQ from the UK to Amsterdam. This move is reportedly designed to limit tax issues linked to Brexit.

Sony is also moving its European HQ to The Netherlands to minimise Brexit disruption.

Japanese retailer Muji is rumoured to be moving its European HQ from the UK to Germany.

Japanese banks Nomura and Daiwa are setting up EU operations in Germany. And, subject to regulatory approval, Japan’s Norinchukin Bank has recently confirmed that, in response to the UK’s planned withdrawal from the EU and other changes to the European economic environment, it is establishing a wholly-owned banking subsidiary in Amsterdam.

Insurance and reinsurance market Lloyds of London announced in May that it had received regulatory approval from the National Bank of Belgium to establish an insurance company in Brussels.

Hermes Investment Management has recently opened a branch in Dublin to mitigate against Brexit risks.

Many smaller businesses are also looking at establishing European bases too. Online giftware retailer Rex London is setting up a Dutch base and The Grown Up Chocolate Company is considering relocating its business to Slovakia, for example.

There is information on how to set up a business in the EU in the Ready for Brexit Directory