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Brexit uncertainty casts cloud over construction sector
T
he ongoing uncertainty over Brexit and the impact on the economy are likely to have a negative effect on construction activity in the healthcare sector over the coming months, experts have warned. Barbour ABI figures, unveiled in its
latest Economic & Construction Market Review, show that the value of contract awards in the medical and health sector declined to £152m in April, a 13.4% drop on March and 33.7% lower in than in April 2018. In the three month period ending April 2019, the total value of medical and health contract awards was £450m, which is 3.0% higher than the previous quarter, but 22.1% lower than the corresponding quarter ending April 2018. “The medical and health sector
remains the smallest in terms of construction contract awards, both in terms of value and awards numbers,” says the report.
“The sector is only likely to exhibit
modest growth in output in the short- medium term given the continuing low level of contract awards.”
Capital dominates
In April, the last month for which figures are available, London has the largest share of medical and health contract awards, with 29.7%. The largest contract award was the £9.8m Watford General Hospital operating theatre redevelopment project, which was awarded to Kier Southern. Scotland was the next-largest region with a 23.8% share of contract awards. The Skye Lochalsh and South West Ross Community Hospital project was the largest contract award for this region at £15m, awarded to Balfour Beatty Engineering Services. Sub-sector analysis indicates that the
largest share of contract awards was for public hospitals, with a 66.5% share, followed by surgeries, health and medical centres, with a 28% share.
As commercial spending is hit by continuing economic uncertainties, including Brexit, leading developers are spending less
But, despite a fall in contracts, it is sectors such as health that have been keeping the market going. Glenigan construction forecasters
report that transport, health and education were the three biggest construction clients in 2018, responsible for £5.2billion worth of contracts alone.
Government contracts The Department of Health awarded 285 contracts in 2018, 15% more than in 2017. “As commercial spending is hit by continuing economic uncertainties, including Brexit, leading developers are spending less,” says the latest Glenigan report. “As a result they are sliding down Glenigan’s ranking of the industry’s top 100 clients and are being overtaken by government departments.” While the devolved governments in
Wales and Scotland had previously featured among the top 100 clients, construction spending shrank by 61% and 10% respectively last year, according to Glenigan’s data. And, after the devolved government in Northern Ireland collapsed in January 2017, the construction sector saw a slump through 2018. But there is evidence it will bounce back over the coming months, offering new opportunities.
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healthcaredm.co.uk
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