New research from construction analysts Glenigan has found a marked drop in the value of private sector projects securing planning approval in Scotland in the run up to the independence referendum next week.
The flow of Scottish private sector approvals from January to July has stagnated, remaining unchanged on a year ago, as the market suffers the effects of pre-referendum uncertainty.
Glenigan data points to a reversal in the recent strong growth in Scottish industrial and commercial approvals, with the value of industrial, office and retail projects granted planning 43%, 24% and 59% lower respectively. This equates to a £234 million loss across the three sectors.
The utilities sector has also suffered a notable decline in the first seven months of this year, with the value of approvals falling 26% compared to the same period in 2013 – a £100 million deficit.
Investor nervousness does not appear to have spread to the housing market, however, with private housing approvals 59% higher than a year ago.
Allan Wilén, Economics Director at Glenigan, said:
“The decline in private non-residential planning approvals and project starts are not a direct vote of confidence for or against an independent Scotland.”
“Rather, the drop in activity, which follows a relative positive performance in 2013, appears to reflect investors’ temporarily deferring decisions due to political and economic uncertainty ahead of next week’s vote.”
“The danger is that these uncertainties persist following the referendum. Commenters have raised concerns that firms headquartered outside of Scotland may reassess their investment plans in the event of a yes vote next week. However, construction product manufactures supplying the UK market from Scotland face similar pressures.”
“In the event of a yes vote it will be important that the key economic issues, from the currency to the operation of energy markets, are quickly resolved in order to provide the private sector with the confidence to press ahead with planned investments.”