The UK skirted a recession in the second half of last year which might be enough to set champagne corks popping among Brexit diehards, but it scarcely conceals the reality that the British economy is now circling the drain.
Apparently not that much. Before the UK referendum back in 2016 there was a real concern that a British exit from the European Union, and especially from the Single Market, would inflict real damage here – especially to jobs-rich and widely dispersed sectors like food production and construction materials that have always been heavily dependent on exporting to the bigger market next door.
There has been damage, especially at the level of individual businesses selling into the UK, and disruption for consumers here buying online from the vast British marketplace. But the truth is the fallout in the grand scheme of things has been negligible. Certainly nothing on the scale of the property crash or the Covid pandemic.
There are changes. Shipping routes that traditionally traversed the UK are now more likely to go around. Supply chains for Irish industry increasingly hinge on continental Europe rather than the UK’s channel ports.
But, on the whole, since Brexit Ireland’s status as the EU’s fastest-growing economy has become more entrenched while the UK economy has fallen increasingly behind other big, developed peers and its politics have lurched from crisis to farce and back again.
Ireland’s growth rate looks set to slow fairly sharply in the first half of this year; the UK economy is tipped by the Bank of England to shrink
Much of Ireland’s headline growth may be down to the machinations of multinationals but it is paying off in terms of a booming jobs market here and bulging State coffers, even after twice bailing out households and businesses since 2020.
The UK economy by contrast is in real trouble. Inflation here is rough. It is double digit there. Ireland’s growth rate looks set to slow fairly sharply in the first half of this year; the UK economy is tipped by the Bank of England to shrink.
In Ireland construction is the weakest economic link and the inflationary squeeze and rising debt costs triggered a drop in new starts last year after a big uplift which could see construction output fail to grow meaningfully in 2023.
Those factors are also in play across the water – even more so after the disastrous and short-lived Liz Truss premiership caused a hike in mortgage interest rates multiple times greater than the ECB is inflicting here.
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Former British Prime Minister Liz Truss
Since Christmas all of Britain’s big three house builders have said they are cutting back on new schemes having already significantly slowed activity over the past year. Analysts reckon housing completions in the UK will be down in the order of 60,000 units in the year to March from the level recorded in 2022.
Britain’s economic uncertainty, sharply rising mortgage rates and the planned end of their ‘help to buy’ scheme combined with rising costs means its a brutally difficult market for builders right now.
Builders here say they are facing many of the same issues, even if it’s less intense. But the Government here certainly isn’t.
Help-to-buy style schemes are cranking up here. Crucially, the public finances are in rude health as evidenced by the €4bn parked over the past week in the rainy-day fund. Whether it proves fleeting or not, the Irish Government is in a position to fund and buy new homes, if it can find the builders.
The fix appears to be obvious. Big British builders have never made the push into the Irish market either because they’ve been happily building at home, or for fear of being wrong-footed in a market and sector that has been notoriously hard to navigate even for domestic players.
But if the likes of Taylor Wimpey, Persimmon and Barratt Developments are slashing their output forecasts at home it might be time for the Housing Minister Darragh O’Brien to hit the phones and lay the ground work for a new British invasion.
It wouldn’t have to involve huge risks, contracting builders to develop schemes on public land is a far less risky move than coming in as speculative developers in their own right.
If that’s a bridge too far, the British building slowdown at least has the potential to plug some of our domestic skills shortages.
The call should be put out for architects, chippies, civil engineers, electricians and plasterers to look seriously at relocating in the short or long term to enhance the capacity and skills of developers here.
Why not Slán Leat Pet rather than Auf Wiedersehen?
Construction professionals and tradespeople of Irish origin might be most likely to respond to that call, but the building industry has shown huge capacity since the late 1990s to integrate workers from across the EU and the British shouldn’t be any harder than Poles, Czechs or Romanians to successfully get working on Irish sites.
Why not Slán Leat Pet rather than Auf Wiedersehen?
Given the scale of the UK slowdown, other countries won’t be slow about sending hiring agents into London, Manchester, Birmingham and other big markets, and indeed British universities.
Yes, the rent situation here is brutal but the Common Travel Area, common language, mutual recognition of qualifications and simple proximity give Ireland an edge over the likes of Canada, Dubai or Germany when it comes to builders upping sticks.
It’s time to dust down the Celtic Tiger construction recruitment fairs and turn England’s difficulty into Ireland’s opportunity.
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