From the Blog

How Might Brexit Affect The Construction Industry?

As the negotiations for the terms of Britain leaving the EU continue, more and more people are turning their attention to the impact that Brexit will have on their business and the wider industry.  For the construction industry there are many issues to consider, both positive and negative.

Overview

Just before the vote, a survey taken by Smith and Williamson found that just 15% of construction executives were in favour of leaving the EU.  One opposite example of Lord Bamford, chairman of JCB, who was convinced that leaving the EU was a good thing and that the costs associated it would be covered by the reductions in overall costs associated with membership.

Now we are looking at the reality of Brexit – so how could this affect the industry?

Skills Shortages

One of the top concerns for construction businesses is the skills shortage that they may encounter.  Currently, the industry relies heavily on labour coming in from abroad for both skilled and unskilled jobs.  The freedom of movement that is guaranteed by the EU makes getting these workers simple but after Brexit, this could become more difficult.

This, in turn, could mean that companies struggle to fulfil contracts or have to increase costs.  An example is the house building that the government stressed it wants to increase – to meet housing targets, companies may have to increase prices because of staff shortages or the need to pay higher wages.

Import& Export Issues

The freedom of movement of goods is another strong element of EU membership and this has been a benefit to the construction industry.  A study in 2010 by the Department for Business Skills and Innovation said that 64% of building materials came from the EU while 63% of building materials made in the UK were exported to the EU.  With Brexit, the cost of both of these could increase.

The government has talked about allowing a UK public procurement policy stipulating the use of UK firms and materials to support UK businesses.  Also, there is the chance of new trade agreements with large importing countries such as China and the US alongside new agreements with the EU that might be more favourable for UK companies.

Bureaucracy

One of the big criticisms of the EU is the amount of red tape that is involved in almost everything.  But with Brexit, this amount of bureaucracy could reduce – although it is unlikely it would go away completely.  There will still be ties with the EU and this means some of the red tape will remain as it is most likely to be a condition of any trade agreement.

Infrastructure

The UK can save money by cutting ties with the EU, but it may also lose funding.  For example, the access to the European Investment Bank (EIB) and the European Investment Fund (EIF) has seen over 600 million Euros invested in SMEs in 2015.  Loss of this access could impact projects of all sizes, even something as big as the High Speed 2 rail project.

Author Bio: Darren Lester is the owner of SpecifiedBy, an online platform which helps specifiers find and research building products and materials through modern search, comparison and information management tools.

Leave a Reply