Weak pound tempts NI firms down south

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A weaker sterling could drive up the costs of materials and tempt Northern Irish firms to pursue more work south of the border, the Federation of Master Builders (FMB) Northern Ireland has warned.

Gavin McGuire, Director of FMB NI, said: “Northern Irish SMEs continued to build up a head of steam in the run-up to the EU referendum, demonstrating that after years of difficult trading conditions, things were beginning to look more positive.

“Workloads for both new build housing and repair and maintenance work – the staples of the construction SME sector – continued to look strong.

“However, enquiries for new work began to decline prior to the referendum, which reflects that UK-wide uncertainty over the result was leading to investment decisions being stalled – given the outcome, this uncertainty is unlikely to dissipate any time soon. Northern Irish firms are working their way up from a low base, so this is cause for concern – they cannot afford another prolonged downturn.”

Mr McGuire continued: “SMEs face the possibility of being squeezed by both a drop in private demand and rising costs of materials and wages. Skills shortages remain acute and the overwhelming majority of construction bosses anticipate material costs will rise in the near future, a challenge likely to be compounded by a rapidly weakening currency.

“Indeed, the value of the pound could have profound consequences for Northern Irish firms. It will make working south of the border, where the revival in construction industry is much more pronounced, even more tempting. We’ve consistently warned the NI Executive that this trend is tantamount to a skills drain and makes the need for Government intervention all the more crucial, especially in light of the news that the UK construction sector is now in recession.”

Mr McGuire concluded: “We are committed to working closely with the Executive to ensure that Northern Ireland’s construction sector thrives. Our survey shows that despite an improving overall picture prior to the referendum, public sector workloads for smaller firms continued to decline – a trend that has gone on for too many years. A significant programme of publicly-funded capital investment in crucial areas such as housing and infrastructure, along with a renewed focus on improving public procurement processes for SMEs so that they can benefit from these opportunities, could be the perfect tonic in case private demand drops off.”