Jim Armitage: The Government's Brexit paralysis is hurting nationwideComments Off on Jim Armitage: The Government's Brexit paralysis is hurting nationwide
The Government’s paralysis over Brexit is having horrible consequences right across the economy.
Today, construction giant Kier is reportedly hoisting a For Sale board over its house-building unit. Why? Because like its peers, its core business of building major infrastructure has been driven into the sand by Westminster’s failure to give green lights to big projects.
The planned Hinkley Point nuclear power station, Crossrail 2, HS2, the third runway at Heathrow — they are all in a holding pattern, waiting for a decision. Construction giants are reduced to scrambling for smaller jobs, hitting margins already struggling from the shortage of big-ticket projects.
Kier, fresh from its profit warning, needs cash to shore itself up. A smart £100 million from selling its decent housing arm will help.
The danger is that if the current woes continue unaddressed for too long, suppliers and potential customers will shy from working with it. Since Carillion, customers only want to deal with the financially strongest businesses.
The word is that Interserve is struggling for that reason.
There’s no guarantee matters will improve in the foreseeable future. As prime minister Boris Johnson may balk at scrapping HS2 for fear of upsetting the North, but Heathrow expansion will have to go whistle.
The boom days of Crossrail, the Olympics and Highways Agency upgrades are over, and there’s no telling when they’ll return.
The industry must consolidate to reflect this. No doubt Interserve would be a willing seller of its construction arm to get the ball rolling.
Time to adjust to the lean new world.