The Budget was spread too thinly says speakers at post-budget webinar on impact for construction industry.
The extension until 2025 of the Help to Buy scheme, which Hardware Association Ireland had lobbied for, was welcomed by speakers at an Octabuild post-budget webinar on the Irish construction industry. The webinar was organised by Octabuild which is made up of Dulux Paints, Etex Ireland, Glennon Brothers, Grant Engineering, Gyproc, Irish Cement, and Kingspan Insulation and Wavin Ireland.
The speakers were economist Jim Power and financial services executive Chris Johns. While welcoming some aspects of Budget 2024, Jim Power and Chris Johns were critical of the €14bn available being spread too thinly. They said that a more targeted approach particularly in construction would have been preferable.
They described the €5bn capital investment allocation to housing as significant but not dramatic. Housing must be treated as a crisis in the same way as Covid was, they said. Chris Johns described Budget 2024 as being probably the most political budget in the history of the state, although Jim Power thought that the 1977 budget held that position.
The speakers agreed that a VAT reduction on construction materials and services would have stimulated demand and the continuation of the Help to Buy scheme until 2025 would support new development. However, they were clear that the Government must take a ‘do what you have to do’ stance if the housing crisis is to be overcome.
In terms of the future, they were optimistic for the construction sector with the demand for housing remaining strong and massive demand in the area of renewable energy. They suggested that the commercial building sector is more complicated with the level of people working from home (WFH) partially responsible, Jim Power felt that the WFH trend would dissipate if the jobs market weakened.
The shortage of skilled labour in the construction industry was another issue discussed at the Octabuild webinar. More needs to be invested in educating young people, and their parents, of the benefits of employment as skilled workers in the construction industry and valuing trades as much as academic courses.
In terms of the wider international economy and the geopolitical circumstances in which Ireland must operate as a free open economy, the speakers described China, which in recent years was an important supply chain for the construction market, as struggling. Its economic future will depend on what its government wants to do.
On the other hand, the US has a good story with its economy continuing to grow. Europe’s performance however is unspectacular, flatlining in terms of growth, although Ireland remains resilient.
Other topics discussed during the webinar included Bond markets, seen by the speakers as the most important indicator of global sentiment but now in turmoil with the global economic situation changing by the day. Chris Johns said, “The Bond markets are the most important financial markets as yields feed through real economic activity and determine asset market pricing including housing. Two weeks ago, the Bond markets were saying that interest rates would increase, now they are saying no, leave them alone.”
Planning was also discussed, and Jim Power was clear that the time taken in reaching decisions needs to be shortened. When it came to home ownership Jim Power and Chris Johns had different opinions. Chris was of the view that there was more importance in Ireland on home ownership than found in most part of the world. Jim on the other hand believed that home ownership created a level of wealth that might otherwise not be possible. In this case ‘culture trumps economics’ he said.
