BREXIT: Case for infrastructure investment 'more powerful than ever', says expert

This is part of Out-Law's series of news and insights from Pinsent Masons experts on the impact of the UK's EU referendum. Watch our video on the issues facing businesses and sign up to receive our 'What next?' checklist.

Planning and infrastructure expert Robbie Owen of Pinsent Masons, the law firm behind Out-Law.com, called for the new UK government to take action to reassure infrastructure firms after Barbour ABI, the consultancy, found a 20% drop in the value of infrastructure contracts in the month immediately following the Brexit vote.

"The uncertainty in the sector that Brexit and the change of government has created needs to be addressed, by the government ensuring and declaring that infrastructure is high on the agenda," Owen said.

"The case for investment is more powerful than ever given the very high level of dissatisfaction with wealth distribution across the UK, reflected in the result of the referendum. Infrastructure has an essential role to play in improving connectivity and productivity across the UK, and helping to rebalance the economy for the benefit of all parts of the UK," he said.

Looking at construction as a whole, new orders fell to £5.8 billion in July, a drop of £400 million compared to the previous month. The value of infrastructure contracts awarded fell by 20% to £1.5bn, making it the worst affected sub-sector; while the value of residential contracts awarded fell by 7%, or by 2,000 units.

However, the value of commercial office construction contracts actually increased between June and July, up by 22% to £648 million. This figure included the £250m contract for Paradise Circus, a planned eight-storey Birmingham office block. The value of industrial construction contracts awarded in July reached £564m, the highest value to date in 2016, including the £100m Reckitt Benckiser research hub planned for Kingston upon Hull.

Barbour ABI lead economist Michael Dall said that the figures were "unsurprising" given the economic uncertainty following the referendum.

"However, it is the infrastructure sector which has performed particularly poorly this month and with the change in narrative from the current government, it puts more emphasis on any fiscal stimulus that they may be planning to make," he said.

The government is widely expected to announce infrastructure investment among other economic stimulus measures as part of its Autumn Statement at the end of the year. Ahead of this, the UK Treasury has announced that it will guarantee any EU funding awarded to UK projects beyond the date that the UK leaves the EU, provided the arrangements are confirmed by the Autumn Statement.