The vote to leave Europe will inevitably be seen as a turning point for Britain. Now, the Builders Merchant Building Index, which is produced under the aegis of the BMF (Builders’ Merchant Federation) and accounts for 80% of the merchant industry’s sales, has asked six of its panel of industry leading Experts for their views on the short and longer term implications of Britain’s Brexit in their own markets.
[This is the second in a series of blogs on the subject. Please note that whilst the Experts here are members of the Construction Products Association, their views do not necessarily reflect the views of the CPA itself.]
Derrick McFarland, Managing Director Keystone Lintels is BMBI’s Expert for Steel Lintels:
We didn’t anticipate the vote, but we need to be prepared for all eventualities. The immediate pricing of uncertainty in construction sector shares is worrying, and a possible general election later this year extends the uncertainty.
We’re confident there is a demand for housing, but not of when it will be delivered. If banks continue to lend and interest rates drop I expect people intent on moving this year will do. Small cuts in house prices may maintain demand outside London.
Raw material prices will increase. Steel has already jumped. While this was coming due to EU levies on Chinese and Russian imports, Brexit is raising prices further.
Brexit has given us lots of challenges and different possibilities to consider over the coming months before we can get back on an even keel.
Andy Williamson, Group Managing Director IKO plc is BMBI’s Expert for Roofing Products:
The vote to leave Europe surprised most of us, and threw up an array of questions and concerns. The uncertain times ahead means businesses need to be flexible to change.
In the short term, products we buy from Europe, finished goods and raw materials including oil, will be more expensive because of a weakened pound. But that is an opportunity for British manufacturers. Made-in-Britain products will now be more competitive enabling them to recapture ground lost to imported building products, including roofing, over the last 12-18 months.
In the medium to long term we still have a housing shortage to address, and RMI will still need doing. Major investment projects are likely to be more of an issue, and we'll see inflationary pressure. On the flip side there will be new opportunities for UK manufacturers and exports.
Nigel Cox, Managing Director Timbmet is BMBI’s Expert for Timber & Panel Products:
Possibly the least considered consequence of the Brexit vote is the sharp increase in the number of urgent and important challenges and decisions piling up in politicians’ and civil servants’ in trays. They’ll take a considerable time to resolve, so we’ll have to be patient with continuing uncertainty.
It’s too early to say what this will do to demand for Timber and Panel Products. But we are confident that the industry’s robust supply chains and accreditation schemes will ensure there are no concerns over product availability.
The volatility in the value of sterling, particularly against the US dollar and Euro, is likely to persist for some time. This will affect the cost of imported products and we recommend buyers check prices regularly for certainty.