The Federation of Master Builders

Growth slows among London’s small builders

Published date: 23 October 2017

Growth among London’s smaller building firms has slowed for the second consecutive quarter, according to the Federation of Master Builder (FMB) London.

Key results from the FMB’s latest State of Trade Survey, which is the only quarterly assessment of the UK-wide SME construction sector, include:

  • In terms of workloads, expected workloads and enquiries, the overall indicator for the performance of London’s smaller building firms dropped by four percentage points in Q3 2017 compared with the previous quarter;
  • 41% of construction SMEs predict rising workloads in the coming three months, down from 48% in the previous quarter;
  • 82% of builders believe that material prices will rise in the next six months;
  • 61% of construction SMEs are struggling to hire carpenters and joiners and 59% are struggling to hire bricklayers;
  • Over half (58%) of construction SMEs expect salaries and wages to increase in the next six months.

Barry Mortimer, Director of FMB London, said: “For the second quarter in a row, growth among the capital’s smaller building firms has slowed. This is clear evidence that material price hikes and skills shortages are starting to bear down on London’s construction SMEs. This is important as just as London is the engine room of the UK economy, construction is the engine room of the capital’s economy. Furthermore, without a fit and able construction sector, the Mayor of London will not be able to deliver the homes, schools, roads and rail projects that we so desperately need.”

Mortimer concluded: “This slowdown in growth among London’s construction firms could also stem from the fact that the capital is particularly reliant on EU migrant workers. We know that some European tradespeople are already choosing to leave the UK following the depreciation of sterling that occurred after the EU referendum. Finding that their wages are not worth as much as they were pre-June 2016, thousands of workers are either returning home or finding work in another country where the currency is a little stronger. Given that 61% of construction SMEs are currently struggling to hire carpenters and joiners, it’s a stark reminder that the Government can’t afford to put a foot wrong in terms of its post-Brexit immigration system. Unless Ministers put in place sensible transitionary arrangements, and develop an immigration system that works for London’s construction industry, the capital could see its many exciting construction projects grind to a halt.”

 

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