No deal Brexit impact

[gc100]

Well a no deal brexit is most likely to kill my build project after already investing 25K it seems.

 

If a no deal is happening, what are peoples best guess on cost of building materials?

 

Aside from the fact we might not be able to sell our house at a decent level (given a market crash) how much do you think raw materials will go up?. I guess the pound will weaken much further especially for 5-10 years. Then we have WTO tariffs/import duty to pay on top which we don't at the moment for goods from EU. I've read that 65% of building materials are imported. I've had a look but it hard to find the correct tariffs. 

 

Given I'm still at the detailed designed stage of my barn conversion, I'm know thinking of try and design the build around UK manufactured/sources materials but I think it will be fairly unrealistic without adding further cost.

 

I'm not too worried about labour as around my way they are all local lads and hardly any EU nationals.

 

Thoughts any one?

 

Edited December 10, 2018 by gc100

[joe90]

I am of the opinion that all this doom and gloom if we leave is not correct. Not one prediction by the “experts” after the vote two years ago  have come true. I liked the channel 4 Brexit debate last night.

[vivienz]

Life will go on. We won't suddenly have the entire UK population out of work and the pound valueless on intetnational money markets.

 

It may take a little time to settle but there are also other suppliers than in the EU. We have recently started sourcing some raw materials for work from Mexico rather than Germany. Nothing to do with brexit, everything to do with better prices and better service , even with import duties and higher transport costs.

[joe90]

30 minutes ago, gc100 said:

I'm know thinking of try and design the build around UK manufactured/sources materials but I think it will be fairly unrealistic without adding further cost.

 

as far as I know all my building materials were UK sourced (certainly the main items) perhaps some fittings were imported. The Germans are very interested in buying their own and we used to try and “buy British” perhaps we should try that again, in fact a Brexit may focus us to produce more of our own. The remouners keep talking about the EU being 40% of our trade, that means that 60% is with the rest of the world, and countries that are fast overtaking the EU. I have thought for quite a while that the EU is a failing “state” and far too interested in its own self.

Edited December 10, 2018 by joe90

[nod]

It’s a double edged sword 

Going off what happened straight after the vote 

slates blocks etc went up about 40%

But I think some of that was manufacturers taking advantage of the building boom

 

Ive states previously that it’s not a good time for self building with laboure availability and costs so high

If there is a crash these cost will fall and may even things out 

 

 

[gc100]

1 hour ago, joe90 said:

I am of the opinion that all this doom and gloom if we leave is not correct. Not one prediction by the “experts” after the vote two years ago  have come true. I liked the channel 4 Brexit debate last night.

 

Can we please keep the brexit debate out of this thread.

 

My question is around WTO tariffs and import duties and % of building materials imported ( for example in 2011 it was 64% of building materials was imported from EU vs rest of world https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/78717/bis-13-p125b-construction-building-materials-commentary-january-2013.pdf )

 

 

Edited December 10, 2018 by gc100
typo

[ToughButterCup]

This is a painful topic. I am not arguing that it should not be discussed.  

Could I suggest to all, responses to this thread should be drafted with great care.

 

Care not to give offence, care not to take offence. And care not to be offensive.  Think also, please, of how some may read more (or less) into your post than intended. 

 

Perceptions matter. 

 

To answer your point directly, @gc100, an extremely high proportion of my build was sourced from Germany or Austria - the design rationale is German too.

I agree with you, No Deal will add to the challenges I face.  And so increase costs. 

[ProDave]

My only big ticket item left is the windows and doors for the sun room.  The fall back is they don't absolutely have to be the same as the rest of the house, it is after all clad completely differently as well, so if the cost of European windows goes silly I will have to see what the UK offers instead. 

[Mr Punter]

I think that the Euro is not likely to rally if we leave with no deal, so there may be little change in GBP v EUR.

 

I understand that the WTO tariff is 3.8% so if you import 65% of your materials it would add 2.5% to your materials cost.  Assuming that materials are half the total, it would add 1.25% to your build cost.

[gc100]

Ah just found this:  https://www.building.co.uk/building-without-borders-construction-needs-a-deal/deal-or-no-deal--constructions-post-brexit-future-hangs-in-the-balance/5095218.article

 

Quote

The good news (comparatively) is that tariffs on most products are relatively modest under WTO rules, averaging out, according to the CBI, at around 5.7% on imports.

 

 

Quote

The CBI says average non-tariff barriers amount to a further 6.5% on costs. Noble Francis, economics director at the Construction Products Association, says: “The problem is not about tariffs, it’s more about the industry working on ‘just-in-time’ delivery models where stocks of materials are not held. The impact of a no-deal scenario is completely dependent upon the extent of the delays.”

 

 

Quote

Lougher says some clients have already started stockpiling products and/or inserting Brexit clauses into contracts that seek to put the risk of additional materials costs and delays on to the supplier. Will Waller, director at consultant Arcadis, says: “You’re potentially not going to be able to get things to site. There is a threat to programmes on schemes immediately from a no deal.” He adds that materials cost inflation would also be exacerbated by a further fall in sterling: “It would definitely be inflationary on cost.”

 

 

[the_r_sole]

.

Edited September 26, 2019 by the_r_sole

[scottishjohn]

I have not started my build yet --will middle of next year I,m guessing  

Do I think it wll have a great effect  if we have a proper brexit

to start with maybe .

will it affect house prices --maybe in SE --but not in most of uk where they have not had the silly house price rises over the last few years .

I just bought 2 house plots over looking the sea  for £60k each

each is just over an acre --so no 

only see it being a problem in SE --

building materials --if house prices drop --then the suppliers will need to sharpen the prices as there will be less slaes to go round 

so it could make for drops in material prices--ANYBODIES GUESS  till it has happened and dust settled .

It is probabe that if we do leave interest rates will go up -- that will suit alot of  people with pension funds  and could maybe help the home build market

again its all project fear until it happens

do not underestimate the effect Uk leaving will have on EU suppliers as well --they need our sales

one thing for sure --they are not making any more land  ,time marchs on and we are all getting older  and politicans always lie and the media is always full of fake news  and promote the worst effects of anything . 

[Temp]

1 hour ago, joe90 said:

I am of the opinion that all this doom and gloom if we leave is not correct. Not one prediction by the “experts” after the vote two years ago  have come true. I liked the channel 4 Brexit debate last night.

 

I dissagree. Someone tried to make that point to Mark Carney (head of the bank of England) when he went before the Brexit select committee (on the 4th December i think). He pointed out that most of claims made by the BoE have indeed come true.

 

Back in May he pointed out that the economy was already following the path predicted and GDP had shrunk by £40bn. Foreign investment in the UK is down 90%.

[Dreadnaught]

3 minutes ago, Temp said:

I dissagree. Someone tried to make that point to Mark Carney (head of the bank of England) when he went before the Brexit select committee (on the 4th December i think). He pointed out that most of claims made by the BoE have indeed come true.

 

 Back in May he pointed out that the economy was already following the path predicted and GDP had shrunk by £40bn. Foreign investment in the UK is down 90%.

 

This article (posted earlier by @daiking) might be a useful contribution to the debate:

 

https://www.independent.co.uk/news/business/comment/brexit-scare-stories-ashoka-mody-imf-bank-of-england-mervyn-king-economics-trade-a8670416.html

Edited December 10, 2018 by Dreadnaught

[nod]

2 hours ago, gc100 said:

 

Can we please keep the brexit debate out of this thread.

 

My question is around WTO tariffs and import duties and % of building materials imported ( for example in 2011 it was 64% of building materials was imported from EU vs rest of world https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/78717/bis-13-p125b-construction-building-materials-commentary-january-2013.pdf )

 

 

Perhaps you shouldn’t have included Brexit in the first line of your tex 

[lizzie]

My build was light on UK sourced materials......my frame was from MBC (Irish but nominally Uk now in Gloucester) slab via MBC so who knows, windows from Austria, cladding Siberian Larch purchased via UK supplier but a French product, render I think UK as was roof finish, kitchen Italian, all tiles and bathroom fittings Spanish.............thats just a quick list. Makes you think..........

 

 

 

[ProDave]

If house prices fall, that always leads to the large house builders mothballing sites and stopping building until they can see the market recover. That will reduce demand for materials.

[Jeremy Harris]

When it comes to supply and demand, which is in essence what we're looking at with building materials, then there are pressures from both the demand side, wanting materials at the best price, and also pressures from the supply side, from suppliers being keen to sell materials.

 

Trying to predict how this closely interwoven trading system will work after any change, be it worries over financial stability, changes in the value of currency, changes in taxation systems, etc, is near-impossible.  One significant issue is that the very act of trying to make a prediction alters the market conditions, as people start to react to what they think that prediction may mean, rather than what may or may not actually happen.

 

For example, if the prices of imported goods were to rise, as a consequence of increased duty being applied, then whether that has a real-world impact depends very much on several other factors.

• Does the increase in the price of imported goods lead to UK suppliers taking advantage of an opportunity to compete, whereas before they may have been priced out of that market?
• Will suppliers choose to reduce their margins to lower the price of imported goods back to a similar level as they were before the imposition of additional import duty?
• Would our government intervene and decide to waive the import duty on key goods in order to maintain UK industry?

 

Trade tends to be self-balancing to a large extent, with those involved, on both sides of the equation, having a strong desire to maintain profitable deals.  For that reason alone I'm convinced that the reality of any perturbation, on a general (not personal) scale is likely to be modest and fairly quickly self-correcting. 

 

I believe the major issues facing everyone right now are the lack of certainty, the total and absolute incompetence of our government to address the impact of that uncertainty and the knee-jerk reactions that some organisations seem to have made at a time when they have no way of knowing for sure what's going to actually happen over the next few months.

[Temp]

The FT reports that our membership of the EU currently gives us preferred trading status with 16 of our 24 largest trading partners. Of these we have so far managed to persuade ONE (South Korea) to continue trading with us on the same terms we currently get. Countries like Japan and Canada revert to WTO rules as things stand. 

 

Canada has outright refused to continue trading with the UK on the same terms we currently enjoy as EU members. A UK cheese exporter on the news the other day said that the WTO tariff on cheese exported from the UK to Canada will be 250% (Two Hundred and Fifty Percent). 

[SteamyTea]

There is a bit of a myth that supply and demand keeps prices at the optimal level.

This is only true if you take a medium term average.

That happens in the short term is that prices go up, or down in steps.

This is because of production capacity.  So say you have a factory that can produce 1,000,000 bricks a week, to make 1,000,001, you need a new factory.  It makes that extra brick quite expensive.  So what happens is that before the major investment is made, prices start to rise, regardless of production or sales volumes.

Perversely, this also happens in the reverse situation,  This is to pay the costs of reducing production i.e. righting off capital expenditure, staff redundancy payments, relocation expenses, different marketing strategies.

With small companies, that may have overproduced and then gone bankrupt, there were bargains to be had at auctions.  This tends not to be the case with larger manufacturers and suppliers.  They now go into pre-pack administration, fail to pay their suppliers/landlords/councils, but don't pass on those savings to the consumer.  Or sometimes they get bought out by another company that is in a similar or allied field.  Buying up a competitor is a good way of charging more.

 

Now a quick look at the UK economy on Wikipedia shows that 1.5% is agriculture, 18.8% industry and 79.7% services (2016 figures).

So where would you sensibly put your money, in agriculture or services?  Industry is quarter the size of the service sector.

It could be argues that agriculture, being so small, has the greatest potential for growth, and if you listen to Farming Today, they seem to think that the market will be challenging, but have greater opportunities.  This may or may not be true, but I suspect that the opportunities are for the land owners, rather than the people doing the actual work (we have some odd tax rules around farming).

Many think that once we are free of EU rules and regulations, and even if we just trade under WTO agreements, we will be free to buy from whoever we want.  Ask a USA dairy farmer how much they now sell to Canada, which has an agreement with the EU to buy 80% of all their dairy from the EU, in exchange for concessions to sell grains and metals to the EU (they can sell a few other things as well).  Canada was not a dairy nation, but it wants to do more trade with the EU, so the deal they agreed did not affect their economy much, probably reduced prices, but it has locked out trade with some other nations.  The knock on affects of this are currently unknown.

So for Canada, they got a good deal, the EU got a good deal, for everyone else, not such a good deal.

So this idea that the UK can freely trade 'with the rest of the world' is nonsense, there will be restrictions, usually financial.

This is why one of the UK's economic successes, the banking, insurance and financial services is moving registered offices and personnel into EU countries.  The bulk of our earnings, as a nation, is in those sectors, neither the UK government, or the EU parliament are in the least bit bothered about the cost of bricks or windows.

If you take cement production in the UK as a proxy of general construction, then the figures are not looking good.  There was ~2% decline in 2016, by 2018 the market was 4.5% smaller, but the cement industry put a glossy spin on it saying that sales had increased.  Increased from a lower base.  Capacity has been taken out of the market and prices have risen above general inflation.  Much of of the supply has been for large infrastructure projects, mainly Cross Rail and the hope of HS2.  Cross Rail is at an end now and HS2 may not happen, nor will the Severn Barrage.  Or a new London Airport.

So where does all this leave us.

In a tight place financially.

Expect price rises, harder to source materials, lower quality and less choice.

Refurbishment may be a better option that new build.

 

 

Edited August 22, 2019 by SteamyTea

[K78]

On 10/12/2018 at 10:03, gc100 said:

Well a no deal brexit is most likely to kill my build project after already investing 25K it seems.

 

If a no deal is happening, what are peoples best guess on cost of building materials?

 

Aside from the fact we might not be able to sell our house at a decent level (given a market crash) how much do you think raw materials will go up?. I guess the pound will weaken much further especially for 5-10 years. Then we have WTO tariffs/import duty to pay on top which we don't at the moment for goods from EU. I've read that 65% of building materials are imported. I've had a look but it hard to find the correct tariffs. 

 

Given I'm still at the detailed designed stage of my barn conversion, I'm know thinking of try and design the build around UK manufactured/sources materials but I think it will be fairly unrealistic without adding further cost.

 

I'm not too worried about labour as around my way they are all local lads and hardly any EU nationals.

 

Thoughts any one?

 

 

What leads you to these crazy conclusions?

 

Stop watching bbc news and reading the guardian. 

[Carrerahill]

On 10/12/2018 at 10:03, gc100 said:

I've read that 65% of building materials are imported.

 

Interesting statistic, but what are you going to build with, much of the timber is British, milled in Britain - I've been using Scottish felled and milled 6x2, 8x2 and OSB, concrete blocks are made just outside Glasgow from British made cement - cable is made in Doncaster, window were made in England, copper pipe made in UK, insulation was made in NI, sand was quarried about 15miles from me, aggregate came from a quarry about 5 miles away... waste piping is made just outside Glasgow using plastic pellets from a plant near Grangemouth - I reckon so far most of my build is British made using British feedstock and home sourced/grown/mined/quarried materials.

 

 

[ToughButterCup]

6 minutes ago, K78 said:

What leads you to these crazy conclusions?

Stop watching bbc news and reading the guardian. 

I do both and take a less pessimistic view than the one in the OP. 

It's entirely understandable if BH members feel jangled by the current processes.

We are all trying to do quite difficult things - build something - and then without warning along comes this once in a century bun fight.

We could all do with a rest. 

[Ralph]

Just now, AnonymousBosch said:

We are all trying to do quite difficult things - build something - and then without warning along comes this once in a century bun fight.

We could all do with a rest. 

 + 1 one that. Even in the best of times a self build can be a very testing and stressful journey.

[K78]

6 minutes ago, AnonymousBosch said:

I do both and take a less pessimistic view than the one in the OP. 

It's entirely understandable if BH members feel jangled by the current processes.

We are all trying to do quite difficult things - build something - and then without warning along comes this once in a century bun fight.

We could all do with a rest. 

 

I remember what they said about rejecting the euro. It’s just scaremongering by big corporations that take big contributions from the EU.

 

The bbc should no longer be state funded. It’s a joke. 

 

Id be worried if I owned a small business relying on Eu imports or exports to the EU. Big business will be able to ride it out and switch suppliers.

 

Look at the change in attitude from merkel and macron in the past 2 days and how it’s as impacted the £. They stand to lose much more than us. Thank god that useless idiot may has gone. She is not fit to run a corner shop. 

 

I honestly think it will be a soft brexit and they will treat the removal of the backstop as a victory. When few in England, Scotland or Wales care about it. 

 

Id personally prefer a hard brexit. I despise what the EU has become. That doesn’t mean I’m a “racist bigot who hates foreigners” as the bbc and guardian say. It means I hate excessive taxes and closed markets. The European council and the unelected arrogant bureaucrats want a European superstate.