Arcadis calls for tax breaks to stimulate construction

27 September 2019 Consultancy.uk

Professional services firm Arcadis has encouraged the UK Government to look to stimulate construction demand with tax incentives. The firm warned that Brexit uncertainty, combined with a wider global economic slowdown, was hitting business confidence, but lowering VAT or incentives for capital investment could remedy flat-lining demand for construction.

At the start of 2019, a regional breakdown of construction activity in four of Britain’s largest cities outside of London revealed that building was booming across the country. That was not to last, however, and soon Brexit uncertainty and an economic slowdown had seen Britain’s construction industry “drop like a stone” in June to record its worst monthly performance in more than 10 years. It has yet to recover, and some are now calling for drastic action to revive the construction sector’s growth prospects, as a potential No Deal withdrawal from the EU looms large.

Previously, professional services firms have recommended a number of new, innovative measures to boost the construction sector. Mace recently claimed that Brexit presents the country with a unique opportunity to utilise so-called Modern Methods of Construction, which include off-site manufacturing and advanced digital design, to make the UK construction scene a key exporter in the coming years. Meanwhile McKinsey & Company suggested that capitalising on modular building techniques could offer the sector possible savings of up to 20%, while significantly reducing construction time by up to 50%.

Arcadis calls for tax breaks to stimulate construction

Now, engineering and advisory firm Arcadis has waded into the debate with a more conservative notion of how to boost Britain’s ailing construction companies: tax cuts. Arcadis forecasts tender price inflation of 3% a year for 2019-2021, rising to 4% for 2022-2023 – although this is dependent on a managed exit from the EU. According to Simon Rawlinson, Head of Strategic Research at Arcadis, a No Deal Brexit would trigger a fall in asset prices and could affect government spending plans – with approval for major schemes put on hold – something he believes tax incentives could counter.

As reported by Building.co.uk, Rawlinson explained, “Delays to Brexit and the increasing likelihood of a UK election continue to shift the attention away from the long-term horizon; the UK construction market is hanging on a cliff-edge. From universal tax incentives such as the lowering of VAT, or incentives for capital investment, to the creation of economic zones or a revision of the fiscal framework, there are a number of significant measures that could be taken.”


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