The depreciation of the pound has hit 70% of builders in the pocket, according to research from the Federation of Master Builders (FMB).
Increases in material prices thanks to the devaluation of the pound since summer 2016 has impacted on the cost of building projects and affected contingency funds. A quarter of all materials in the UK construction industry are imported – resulting in less spare change in the sector.
“Thousands of smaller building firms are grappling with the rising cost of materials caused by the depreciation of sterling since the EU referendum,” said Sarah McMonagle, Director of External Affairs at the FMB. “More than 70% of smaller building firms have experienced increased costs as a result of the weakened currency, with additional increases of 10 to 15% expected as the new year unfolds. Anecdotally, construction SMEs are already reporting an increase of 22% in Spanish slate and 20% increase in timber.
“A quarter of all materials used by the UK construction industry are imported – this is significant and underlines the vulnerability of the industry to sudden fluctuations in the strength of our currency. The combined pressure of higher material prices and the rising cost of skilled labour represents a serious challenge to builders.”
The Construction Products Assocation (CPA) has predicted that construction activity will be largely flat for the next two years, with infrastructure growth offsetting falls in commercial offices and industrial factories.
Read more from the FMB here.