UK-specific issues are adding to global shortages

Consultant Says UK Specific Problems Add To Global Shortage

A combination of UK-specific factors may affect the construction sector’s recovery from this year’s pandemic, Aecom warned.

Rising labour costs due to post-Brexit emigration and permanent non-tariff barriers affecting UK construction product imports from the EU are driving up input costs, the consultant said.

The EU is a major source of supply to the UK for a wide range of building materials.

But some EU exporters have stopped supplying the UK due to additional red tape making it commercially unviable, while others have raised prices to cover new non-tariff barriers and additional administrative costs.

CPA data released in January also showed that the EU-born construction sector workforce declined by more than a quarter in the year to Q3 2020.

And while a record 42% drop in UK commercial exports to the EU in January partially recovered in February, exports in the other direction have seen a much weaker recovery.

EU imports rose just £1.2bn in February after a record drop of £6.7bn in January, according to the latest figures from ONS.

The issues have been outlined in Aecom’s market forecast for construction, which predicts bid prices will increase 2.4% from the second quarter of this year to the second quarter of 2022 and 3% over the next 12 months.

UK-specific cost pressures are occurring in the context of global material shortages caused by supply constraints and increased demand, especially in the US.

Steel prices have risen 25% in the 12 months to February this year, but although it had risen with the value of the dollar, the dollar fell out of sync at the end of February.

Aecom said the weakening of the dollar in recent months now runs the risk of driving up the price of steel and other metals further.

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