What are the Impacts of Brexit on the UK Construction Sector?
The construction industry will face disruption from Brexit. But it might spell good news for those looking for work in the sector.
From the moment the UK woke to the news that the British public had voted to exit the EU in the June 2016 referendum, there has been a constant flow of uncertainty regarding everything from freedom of movement to the effect on property prices.
Every industry will be affected to a greater or lesser extent by Brexit, but for those trying to find construction jobs, the implications are particularly significant.
The key issues include the labour market, access to materials and the state of EU funding. Let’s take a look at each in turn.
The Labour Market
Free movement and the large proportion of skilled Eastern European workers currently engaged in UK construction projects is seen as one of the biggest issues for the industry.
The construction sector employs around three million people in the UK, and conservative estimates suggest that around half a million of these are from elsewhere in the EU.
It is no exaggeration to say that freedom of movement is at the heart of the UK construction sector, and is essential for finding the right people with the right skills. Without this freedom, many workers are likely to seek employment elsewhere, for example in Germany, Spain and France.
Leaving the UK could lead to increased labour costs for construction companies, but this might spell better news for UK-based workers with the right skills, who will be in greater demand than ever.
Materials and Resources
The free movement of resources is not so different to the free movement of individuals under the current EU rules.
From outside, the UK will have to forge new trade deals, and there is no guarantee what these will look like post Brexit. Any increase in tariffs will inevitably be passed on and result in higher costs within the sector, affecting individuals and companies looking to employ builders.
The issue of EU funding could prove to be the elephant in the room, and might have a bigger impact on the industry than many people realise. Such initiatives as the European Regional Development Fund (ERDF) are of critical importance to the industry.
Most of the major regeneration and social housing projects in the UK are financed by EU funds, and we are one of the EU’s largest net beneficiaries from these types of schemes. The construction landscape might look very different when they are swept from under our feet.
What does the industry think?
In early 2017, finance company Smith & Williamson surveyed construction executives from across the UK and found that only 15 percent were in favour of the UK’s exit from the EU.
This certainly gives a strong indication that the industry as a whole is in the “remain” camp, and in view of the points we have raised above, that comes as no surprise.
The survey also revealed that confidence within the industry has never been higher. It is only natural that business leaders are keen to maintain the growth and prosperity of recent years, and are concerned that Brexit might upset this delicate balance.