The vote for Britain to leave the European Union was held over a year ago, and it is still unclear as to what long-lasting effects Brexit will have on the UK economy. Many believe it could lead to a stronger, more independent Britain with less reliance on foreign imports and an influx of unnecessary labour. However, deeper concerns have emerged about the ability of the UK to act on its own, with a possible loss of valuable trade and increased supply costs. Now, a year on, let’s take a look at what effects Brexit look likely to have on the UK construction market.
Availability of skilled labour
Around three million people are currently employed in the UK construction industry, and a fair proportion of this number is made up of foreign workers. These workers fill a number of highly-skilled as well as unskilled roles, which are vital to keeping businesses running efficiently. Current debates with the EU are centred around the ability of such foreign nationals to maintain some kind of British citizenship or at least working visas.
It is proving difficult to come to any kind of arrangement and has the potential to greatly decrease the ease with which these workers can remain in the UK. No free movement of labour could mean it is easier and more affordable for foreign workers to instead move to other European countries to seek employment. Not only could this mean a shortage of available workers, it could also mean losing out on implementing new innovative skills that are being utilised in their native construction industries.
Availability of necessary resources
It is no secret that the UK relies heavily on foreign imports across all industries, and the construction industry, in particular, may be hit by increased import costs. Higher materials will cause building costs to rise, and a subsequent fall in demand for local construction services. However, the extent to which this will happen depends largely on the final trade agreements which are decided. Britain will need to forge these new trade agreements and it is unclear as to how favourably all countries will view the UK’s position outside of the EU and how much it will cost to ship goods. However, Switzerland is not a part of the EU but still benefits from healthy trade agreements with neighbouring European countries, so the UK could find itself in a similar position.
Less funding for major projects
Various EU schemes, such as the European Regional Development Funding (ERDF), draw in millions of pounds worth of investment to the UK each year. Most notably, between 2007 and 2013, €755 million was committed to regenerating the north-west of England, which had wide-reaching benefits for construction firms across the area. By leaving the EU, Britain will no longer have access to such schemes. However, at the same time, by not being in the EU, the UK will have no membership costs to pay. Therefore, it depends on how the UK government decides to invest the funds it has left over, and whether or not it will maintain or replace such schemes.
The standard of working conditions
EU law is what governs the working conditions of labour throughout the UK. Everything you see with regards to health and safety comes as a result of EU law, and the UK will have to go through and draw up completely new legislation regarding all manner of working conditions. It is expected that the UK’s stance would remain similar to those currently in place, but it is difficult to know what will change until the final legislation is drawn up and issued to the industry.
Essentially, the Brexit vote could have both substantial positive and negative effects on the UK construction industry. The ability of firms to remain profitable and competitive will be largely dependant on the government’s ability to maintain strong relationships with major European trading partners. It will also depend on the ability of firms to adjust to changing conditions and update their working business models in accordance with this change.
Lydon Contracting Ltd
Tel: 01327 811533