Housebuilding companies had already begun to retreat from acquiring land for new projects ahead of the referendum but uncertainty caused by the UK’s vote to leave the European Union on 23 June is threatening to give the sector a further blow, the agents said.
The report predicted commercial real estate investment activity, which had already fallen ahead of the EU referendum, was likely to dip further as investors were turning away from the asset class following the vote.
It also detected subdued activity in the housing market, which had been lower than a year earlier.
The agents’ Summary of Business Conditions’ July update which ran from late May to late June, immediately before and after the referendum.
In June the RICS Residential Market Survey, a monthly indictor of chartered surveyor sentiment, indicated Brexit uncertainty had taken its toll on markets in most areas of the UK. Prices fell particularly in London where buyer confidence took a strong dip, the survey found said.
However, while some businesses reported a dip in housing market sentiment immediately after the referendum, transactions have so far been more resilient than expected, the agents said.
Overall, the annual growth of business activity had remained moderate and little changed in the month up to the vote, the agents said.
Consumer spending and construction output growth had eased a little, but were offset by a pickup in manufacturing growth from a low base, they added.
While the agents said they had already detected signs of uncertainty leading to delays in decision-taking, including capital spending, hiring and property investment before the referendum, they added uncertainty had risen “markedly” after 24 June.
The report found many firms were sticking to ‘business as usual’ while they await further news on the UK’s exit from the EU but about a third of firms thought the long-term effects would be negative.
This would particularly affect investment and staff hiring plans over the next 12 months. However, “as yet, there was no clear evidence of a sharp general slowing in activity,” the agents said.
National Association of Commercial Finance Brokers (NACFB) chief executive Adam Tyler said the BoE’s report should reassure UK businesses things are “more or less normal”.
Office of National Statistics (ONS) out on 20 July, reported that the number of UK employed had reached 31.70 million, having increased by 176,000 on the previous three months.
The employment rate was 74.4%, the highest since comparable records began in 1971, the ONS said.
Taylor said: “Coupled with the robust jobs data published on Wednesday, this latest report from the Bank of England will provide considerable encouragement to the UK business community.
“Businesses are monitoring events closely, especially news surrounding future trading relations, but the corporate paralysis some suggested has simply not materialised.”
He added: ”It’s not quite business as usual, but for many businesses in many sectors it’s not far off.”
The BoE’s report also found bank credit availability in June had improved a little across all sizes of company, largely reflecting increased competition in the market. Conversely business demand for credit had remained subdued, it said, alongside lower expectations for investment spending.
Tyler said: “The challenge now is to ensure businesses continue to receive the funding and support they need in the uncertain times ahead. Again, there is no sign, as yet, that bank funding has dried up.
“Businesses appear to have taken a very pragmatic view on recent political events. Be cautious, certainly, but don’t be overwhelmed.”