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Construction slump fuels post-Brexit vote slowdown fears

Published 15/07/2016

The contraction is more severe than expected
The contraction is more severe than expected

UK construction output fell by more than expected in May, adding to concerns that the economy is in line for a sharp slowdown following the vote to quit the European Union.

Output contracted 2.1% compared to April and 1.9% year on year, according to figures from the Office for National Statistics.

The disappointing numbers came in below economists' forecasts and follow a Markit/CIPS PMI survey in June, which showed the steepest contraction of construction activity for seven years.

The data provides further evidence that projects were put on hold in the lead-up to the EU referendum, with experts forecasting worse to come.

Chris Williamson, chief economist at Markit, said: "A drop in UK construction output in May adds to what's looking like an ugly run of data for the sector. However, it looks like there's worse to come, possibly much worse.

"The reality of the UK leaving the EU and the associated heightened uncertainty, especially in relation to commercial property and housing investment, is therefore likely to cause further stress in coming months."

Commercial property is bearing the brunt of Brexit fallout as investors scramble to cash out following the Brexit vote.

Last week, Henderson Global Investors, Canada Life and Threadneedle joined M&G Investments, Aviva and Standard Life Investments in halting trading in their property funds.

On Wednesday, Aberdeen Asset Management lifted a week-long suspension from trading in its property fund.

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From Belfast Telegraph