Brexit brings more bad news for jobs

Six hundred workers at Travis Perkins – 2% of its workforce – have been told that they have lost their jobs after the UK’s largest builders merchant closed 30 stores. The news comes as news broke that unemployment in the quarter June to August rose by 10,000 to 1.66 million.

Travis Perkins runs just over 2,000 stores under the names of Travis Perkins, Benchmarx, BSS and PTS and Wickes, and the closures represent 1.5% of its outlets. Jobs will go across the group, except for DIY stores trading under the Wickes name, with ten distribution centres also set to close.

The company has experienced poor performance in its plumbing and heating division, leading to profits coming in below target this year. It is acting early to trim costs in order to try to keep the situation under control, claiming that uncertainty in the building sector is forcing it to take a prudent approach to costs now.

However, Brexit has fuelled the company’s problems. Economic uncertainty is thought to be the major reason for a 22% fall in Travis Perkins’ share prices since the EU referendum in June, with the company taking 5% of that hit in early trading today

The news about the state of the company will come as bad news to the Government, which had been hoping that the construction sector would remain buoyant – as well as attracting overseas investment – and contribute to economic growth. The slowdown in the Chinese economy has reduced the number of international financial speculators prepared to invest in the UK, and Brexit uncertainties have left others reluctant to gamble on ever rising house prices.

The Government could try the simple solution of funding more house building itself. This would have a positive effect on jobs and, therefore, the rest of the economy, as well as meeting social need. Investing in housing is, literally, “as safe as houses” as rents will pay back loans and then contribute a constant income stream. To date, there are no signs that the Government will intervene to this effect and every indication that it will continue its woolly policy of relying on the private sector.

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