Sector - Finance & Legislation
Irish construction booming
As the UK struggles with political uncertainty and construction falters, Irish construction is booming, with demand for UK imports remaining high.
According to new data released by Fexco Corporate Payments, Irish construction firms’ demand for UK imports has eased to a more modest 17% over the last 12 months, following a 128% increase over the past three years.
Ireland’s building boom contrasts with the UK’s stagnating construction sector, which grew by just 0.7% in 2018.
The analysis, of more than 4,000 transactions made through Fexco Corporate Payments*, shows that in the 12 months to February this year Irish building firms spent 17% more on UK goods and services than they did in the previous year. While Irish builders continue to spend more, and more frequently, on imports from the UK, the spike in spending seen in the aftermath of the UK’s 2016 Brexit vote has eased.
Though the import boom is cooling, the Irish construction industry remains bullish. A recent survey of Irish building firms by the building consultancy Aecom found more than three quarters expect their business to grow in 2019, and forecast that total output would increase by 20% over the year.
Speaking ahead of Thursday’s National Construction Summit in Dublin, David Lamb, head of dealing at Fexco Corporate Payments, commented: “The cooling of Irish builders’ appetite for UK imports is likely to be driven by two factors; a modest strengthening of sterling – which has risen by 4% against the Euro since the start of 2019 – and a greater willingness to import materials from other EU countries.
“If Britain leaves the EU without a trade deal, Irish imports of construction materials from the UK would be subject to WTO tariffs of up to 6%, so clearly it makes sense to investigate alternative supply chains.
“However the UK’s proximity and the ease of buying from British suppliers means it remains the number one source of imports for Ireland’s booming construction industry.
“Even with sterling’s rally this year, a Euro is still worth 11% more against the Pound than it was on the eve of the UK’s Brexit referendum, making British imports an attractive way to mitigate the cost pressure of rising wage bills at home.
“With the UK Parliament taking a series of votes this week that will determine the course of Brexit, the exchange rate is likely to face extreme volatility, so Irish builders who import regularly from Britain should consider locking in the current favourable exchange rate by using a forward contract.”
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