As the Brexit deadline looms ever nearer, but with no proper conclusion in sight, we look at what effect the UK leaving Europe may have on construction…
The housing market
With the level of uncertainty, it is true that there has been a slowdown in the housing market recently, however estate agents and surveyors continue to predict growth and properties continue to sell, albeit at a more realistic figure than previously. And the Construction Products Association predicts a small 0.6% growth in construction output for 2019, supported by modest growth in housebuilding and infrastructure and 1.4% overall growth in UK GDP.
As we all know, non-UK workers are a vital cog in the mechanics of the construction industry, thanks to the right to free movement that being a member of the EU allows within the UK.
Even before the deadline, migrant workers have begun abandoning the UK. If this continues, the fact that demand for labour will outstrip supply could see workers able to demand ever-higher wages, pushing up project costs.
With the government’s housing targets already in place, a lack of labour could mean that housebuilders are unable to meet these demands – an increase in costs and the sheer inability to get projects finished could see the housing crisis worsen.
This would be a particular issue in the capital – with the Office of National Statistics figure showing that a third of London’s construction site workers are from outside the UK, this could have a real impact.
On the bright side, it has been suggested that some foreign investors may leave the UK property market, freeing up empty investment properties.
Availability of materials
We have also heard that developers have been stockpiling building materials for many months, filling warehouses amid fears that importing building materials from the EU will be difficult and expensive.
Being a member of the EU allows free movement not only of people but also of goods, with no restrictions of requirement to pay excess duties. Once we leave the EU, those who import or export product could be liable to pay duty and be limited in the amount of materials they can move in or out of the country.
However, it may be that we end up with some kind of procurement policy that benefits UK firms and producers. It has even been suggested that the government could keep out cheap steel imports (like those from China for instance) which killed off our steel industry in the first place, by imposing tariffs.
It is also possible that we could negotiate our own trade agreements with large importing countries such as the US and China, as well as Europe.
Cutting the red tape
Many hope that taking the UK out of the EU will see a reduction in all of the red tape that is required – but whether this is likely remains to be seen. We would still, of course be tied to a number of trading standards and other requirements.
And finally… the end of 2018 saw the UK construction sector hitting a three-month low, with demand for commercial projects dropping, and the looming risk of a no-deal Brexit. For all the apparent doom, though, we are pleased to say that clients, old and new, continue to approach us about new projects. Indeed, we recognise a further upturn in these new enquiries, which we view positively and continue to meet client aspirations.
Nevertheless, it remains to be seen where we will be if, and when, the UK finally leaves the EU.
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