The UK’s decision to leave the European Union will steepen the downturn in the country’s construction equipment market, and could have a significant inflationary effect, according to a new report by specialist consultancy, Off-Highway Research.
The report, The Impact of Brexit on the UK Construction Equipment Industry, includes a five-year forecast for sales of construction equipment in the UK, which has been developed following a series of in-depth industry interviews, following the unexpected referendum result. Sales of construction equipment in the UK are expected to be 10% lower this year than in 2015, compared to the previous (pre-Brexit) forecast of an 8% decline. The trend of lower than previously expected sales is expected to endure for at least three years, and the impact for different types of construction equipment is discussed in detail in the report.
In addition, the UK is expected to see higher prices for construction equipment due to the sharp depreciation of the Pound. According to Off-Highway Research, some 70% of the construction equipment sold in the UK is imported, with other European countries being the most important suppliers. Indeed, more of the construction equipment sold in the UK is manufactured elsewhere in Europe, than is produced domestically.
These are discussed in depth in the report, with detailed analysis across 14 individual equipment types; articulated dump trucks, asphalt finishers, backhoe loaders, crawler dozers, crawler excavators, crawler loaders, mini excavators, motor graders, rigid dump trucks, masted rough terrain lift trucks, skid steer loaders, telescopic handlers, wheeled excavators and wheeled loaders.
At the same time, Off-Highway Research says the depreciation of the Pound could give UK-made construction equipment a price advantage both at home and overseas. This particularly applies to articulated dump trucks (ADTs), backhoe loaders and telescopic handlers, all of which are produced in significant numbers in the UK in terms of the overall world market for these machines.
The final section of the 50-page report discusses the different models which may be adopted for the UK’s departure from the EU, and looks at their implications for the country’s construction and construction equipment industries.