20 Mar 2017
The Prime Minister’s speech on 17 January makes it more likely that the UK will withdraw from the Single Market and Customs Union. In light of this, BCIS has updated its three scenarios for the UK’s withdrawal from the EU and its five-year forecast for building tender prices.
The forecasts reflect the increased likelihood of restrictions on the movement of labour and pressures on Sterling that are likely to result from withdrawal from the Single Market and the Customs Union.
The consequential effect on the BCIS three scenarios for tender prices follow:
- Tender price increases slowing over the next year, then rising to 30% above current prices by 4th quarter 2021 ("upside scenario").
- Tender price rises remaining virtually static over the next two years, then rising to 18% above current levels by 4th quarter 2021 ("central forecast").
- Tender prices to fall by 10% over the next two years, with a recovery to 8% above current levels by 4th quarter 2021 ("downside scenario").
BCIS has also produced forecasts based on the three scenarios. These reflect the different political outcomes from the exit negotiations from the EU and are equally likely:
- An "upside scenario" based on the assumption that we will remain in the European free trade area, but there are restrictions on the movement of labour.
- A "central scenario" based on some restrictions to trade and there are restrictions on the movement of labour.
- A "downside scenario" based on the assumption that we do not have favourable access to the European Union market and there are restrictions on the movement of labour.
The terms central, upside and downside reflect the impact of the scenarios on construction demand.
We are publishing the central scenario as the forecast for the price and cost indices but it should be borne in mind that each scenario is equally possible.
The BCIS indices and forecast are published in the BCIS Online service.
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