Yorkshire's construction industry shows 'signs of improvement' after Brexit vote

The construction industry in Yorkshire is showing signs of a recovery in the three months since the the EU referendum vote.

According to data from business rescue and recovery specialist Begbies Traynor, 15,654 Yorkshire businesses showed ‘significant’ distress, a fall of 4% in Q3 compared with the previous quarter, however, the decrease was more marked across the UK with a national average fall of 6%.

Levels of significant distress showed a rise, however, when compared with the same period the previous year, increasing by 2% across the UK and by 3% in Yorkshire.

Some business sectors in the region have fared better than others, with construction showing an improvement both year on year and over the past three months.

The quarterly Red Flag Alert data reveals falls in distress of 3% and 8% respectively, equating to 189 fewer financially distressed construction businesses in September than there were in June.

Although still affecting 2,042 construction businesses in the region, making it the most severely distressed sector in Yorkshire, the figures reflect the bounce back in the sector reported by the UK Construction Purchasing Managers’ Index last month [September].

Other areas of the Yorkshire economy showing improvements include financial services which saw distress fall by 13% since June and by 7% over the last year to affect 279 firms.

The automotive industry also saw a 14% improvement over the last quarter, and an 8% improvement annually, with distress now affecting 576 businesses.

By comparison industrial transportation saw distress continue to climb, with levels up by 16% year on year and by 12% since the previous quarter and now affecting 384 businesses.

Distress also rose in the travel and tourism sector, rising 9% year on year and 16% in the past three months to affect 134 businesses.

Julian Pitts, regional managing partner for Begbies Traynor in Yorkshire, said: “It’s good news – albeit something of a surprise – that the construction industry appears to be showing marked signs of improvement, in Yorkshire as elsewhere in the country.

“The Government’s announcement of its new £5bn homebuilding stimulus package should go some way toward shoring up the apparent bounce back, however decreased investment in the sector and rising prices for raw materials as a result of the weakening pound certainly do not bode well for Yorkshire’s builders over the next 12 months.”

He added: “As far as reassurances that the post-Brexit economy will be in better shape than had been predicted by most business leaders and economists go, unfortunately in all likelihood this will turn out to have been a temporary reprieve.

“The continuing turmoil in the currency markets and the uncertainty surrounding prolonged Brexit negotiations in 2017 are likely to take a heavy toll. Most businesses need a secure environment in order to flourish and SMEs should to proceed with caution and prepare themselves for a bumpy ride as the UK navigates its way through unknown waters.”

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