Northern Ireland's construction outlook good - but Brexit 'complicates trade and hampers growth'

The fall-out from Brexit continues to "complicate trade and hamper growth" in the north's construction sector, according to the latest industry barometer from Aecom
Gary McDonald Business Editor

THREE years on from the UK’s official exit from the European Union, Brexit continues to "complicate trade and hamper growth" in the north's construction sector, a new survey says.

But infrastructure consulting firm Aecom also points to Northern Ireland having bucked the trend in some sectors by actually growing output and effectively managing inflation.

Its annual construction industry review says the construction industry in the region generally performed well in 2022, though by the summer total output had declined by 3.9 per cent, despite a robust ongoing pipeline.

However, housing bucked that trend, increasing by 6.5 per cent in the second quarter of 2022, driven by private housing development, and detached houses increased in value the most at 10.8 per cent.

Aecom says the outlook for the north’s construction sector is "good in the immediate term", with the industry continuing to be busy and a current steady pipeline of work.

But it insists there are "uncertainties bubbling" - and Brexit continues to complicate trade.

Indeed separate research earlier this week found that the cost of labour in the UK is up by 30 per cent since the referendum, double that of some EU countries, while the cost of materials has also increased more steeply.

The annual review also showed that commercial rents in Belfast, at close to £24 per square foot, represent exceptional value for money when compared to regional cities in both the UK and the Republic, which could prove to be a major draw for foreign direct investment if a solution to the Protocol is achieved.

Jody Wilkinson, director of Aecom Northern Ireland, said: "While the outlook for 2023 is good, the past three years have taught us that the global, social, political, and economic situation remains unpredictable.

"We have come to expect the unexpected. A lack of resolution to the Protocol means Northern Ireland is missing out on the benefits of currently having access to both the UK single market and the EU single market. We should be making the most of this unique position, attracting trade and investment.

"Politicians in Belfast, Dublin, Westminster and Brussels need to find agreement to provide confidence and clarity to the Northern Ireland construction sector and prevent a dampening of private sector appetite."

He added: "As we enter 2023, one thing is crystal clear - that ESG must be a core principle of any project to have long-term viability. Thankfully building sustainably is now firmly on the public sector agenda.

"Around £1.3 billion in investment a year will be needed between now and 2030 to stay on course to meet the targets in the NI Climate Change Act, which commits Northern Ireland to net zero carbon dioxide emissions by 2050.

"Decarbonisation of the local construction industry will be critical in achieving it, and Northern Ireland’s infrastructure will have to evolve - and fast."