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How will Brexit affect the construction industry in the UK?

  • November 2, 2017
  • By Grace
How will Brexit affect the construction industry in the UK?

In recent news, The Irish Times revealed that 70% of Irish construction firms have cut exposure to the UK ahead of Brexit and have begun looking for new opportunities elsewhere in mainland Europe. Like most other industries, Brexit has cast a shadow of uncertainty over the construction industry, with the risk of currency volatility looking to be one of the industry’s main issues for longer-term projects.

But is it all doom and gloom for the industry following Brexit? The industries main concerns include the potential skills shortage, the import and export of materials, and the regulations and standards. It’s no surprise that the industry fear what the future might hold, as only 15% of construction professionals favoured the UK’s exit. Providers of access platforms, Nifty Lift explore what could be in store for the construction industry when the UK leave the EU.

Skills shortage

The industry has raised concerns that Brexit could result in higher project costs as labour demand outweighs supply. This is because the UK’s construction industry has always heavily relied on sourcing skilled and un-skilled workers from overseas. As the transition to leave the EU continues, the UK could face a shortage of workers for the industry as the free movement of people into the UK becomes an uncertainty. A shortage in workers could then have a knock-on effect across building projects, including the government’s housing targets – deepening the housing crisis across the UK.

30% of UK construction professionals admitted that hiring non-UK workers was an important factor for the success of their business – however, surveyors have warned that key projects could be at risk following the exit – the government has been told they could lose 8% of the industry’s workers. Scarily, skilled construction workers have not been added to the UK shortage occupation list which gives some sectors priority during the visa application process – this means the construction industry could be set to lose more than 175,000 EU workers if they don’t retain access to the EU single market after Brexit.

Export and import of materials

As members of the EU, previously the free movement of goods in and out of the UK to overseas EU countries was allowed. However, once the UK stands alone, we could face duties and restrictions that have previously been eliminated thanks to our EU membership. As Irish construction firms have already cut exposure, we question which countries are next?

Currently, according to the Department for Business Skills and Innovation, the UK imported 64% of their building materials from the EU, and exported 63% of building materials to countries within the EU. Following Brexit, the UK could face limitations on importing and exporting which could lead to a shortage in materials, or an increase in cost. The cost of materials has already experienced an increase since the announcement of Brexit, with the cost of imports from the EU increase by 5.8% in January.

Regulations and standards

For some construction professionals, this is a great opportunity to take back more control over contractual risk and law clauses. Compliance across the UK is generally already strong, with Brexit not forecast to affect it. However, some fear that Brexit will lead to the removal of several red tapes outlined by the EU, but this does not necessarily mean that all ties will be broken between the UK and its former partner. Instead, a new model is likely to be negotiated and adopted, which is likely to also consider the current trading standards across the UK.

An industry standing on its own two feet

Brexit could prove to be the motivation the UK industry has needed to stand on its own two feet. Following the news that UK voted to leave the UK, the number of EU-qualified architects registering to work in the UK has risen by more than 10% – in 2016 alone, suggesting that a fear for skills shortage might not be a problem after all. The government could have the opportunity to negotiate their own terms to employ non-UK workers.

Whilst there are fears of uncertainty in the construction industry regarding the export and import of vital materials, the UK’s plan to leave EU could actually open up new doors for the industry. Following their exit, the UK could have the opportunity to stand tall on its own and negotiate its own trade agreements with trading countries across the UK, and other importing countries such as China and the USA. In addition, the Irish firms that plan to retain a presence in the UK indicate that the key opportunities within our country are housing, the government’s ‘Build to Rent’ scheme and public infrastructure.

It seems that the UK’s construction industry still has a lot going for it, despite the uncertainty that Brexit has brought.

By Grace, November 2, 2017
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