It looks as if HVAC and Smart energy firms are feeling the uncertainty of Brexit.
BSRIA has released its first snapshot of the UK heating, ventilation and air conditioning (HVAC) and smart energy market landscape for products since Britain voted out.
The HVAC and smart energy product market is estimated to be worth £4.5 billion in the UK per year.
Market growth was expected to be around the 3.1% mark for 2016 (this was before the Brexit vote) The BSRIA research with suppliers post-Brexit now anticipates this will shrink to 1.1%, knocking off £95 million.
Andrew Giles, director of worldwide market intelligence, BSRIA, said:
“Around 80% of the £2.2 billion market is domestic boilers, water heaters and radiators. Renewable alternatives remain niche markets.
Heat pumps are falling with the Renewable Heat Incentive having a limited impact.
The main heating markets are saturated and over 90% of sales for replacement and extensions/refurbishment.
“With the death of the Green Deal and other schemes, BSRIA had expected a flat market for heating but now expect a small proportion of consumers to delay going ahead with refurbishment because of the general uncertainty surrounding Brexit resulting in a drop of 1.2% in the market.
“The UK has the biggest boiler market in the world, by a considerable distance, with nearly 1.7 million boilers sold a year and this is expected to be the case until 2020.
“There are no longer any British owned boiler manufacturer companies in the UK. The boiler market is entirely controlled by EU-owned companies, with their headquarters elsewhere in the EU.
“The EU boiler manufacturers are well established in the UK market and three–quarters of sales are produced here, but there are a significant number of companies importing who will be suffering from the lower pound. Furthermore, some imported component costs may rise.
The UK boiler market is sold nearly entirely through wholesalers and is already one of the most price competitive markets in Europe.
“Also post-Brexit, subsequent trade deals between the UK and the EU could prove difficult once Brexit negotiations are defined and Article 50 is invoked.
Due to likely increased red tape, importing boilers or components into the UK could be harder.
“In the short term, companies manufacturing in the UK will gain a competitive advantage in the UK because of the lower pound, which is positive.
“The long-term remains unclear. As such, this is a risk for the UK economy and especially so if EU boiler manufacturers decide to ease their presence in the huge but challenging UK market.”
The Office for National Statistics (ONS) says that there has still been little impact of the Brexit vote on the UK economy so far although growth is expected to slow to 1% in 2017.
Official figures still don’t show a “collapse” in confidence as was reported before the vote which has lead to criticism aimed at the remain campaign.
The truth is it is still probably too early to tell and uncertainty is clearly in the air. Next year could be a tough year but there may be a silver lining, only time will tell in the end.