CPA/Barbour ABI Index Rising costs could threaten growth

摘要

The UK economy and construction defied doom-mongers in the second half of last year and indications are that it will continue to do so in the first half of this year. But there are two threats to growth: rising costs and falling contract awards. The depreciation in sterling post-EU referendum means the costs of imported products, imported materials used in UK manufactured products and fuel/energy are rising. Expect a further depreciation and rise in costs after we submit the letter for Article 50 and more currency volatility due to endless speculation about the final deal. The uncertainty post-referendum has also hit new contracts in construction sectors where there is high up-front investment for a long-term rate of return, particularly in commercial and industrial. Overall, the CPA/BarbourABI contracts award index fell by 5% in December and was 11% lower than a year ago, with falls in offices, retail, factories, warehouses and publicly-funded education.