The impact of the impending EU referendum on the UK construction market

The impact of the impending EU referendum on the UK construction market

With the EU referendum scheduled for 23rd June 2016, it is important for us to reflect on the impact Britain leaving the EU may have on the UK construction industry.

 

The stakes are undoubtedly high, with the end result potentially ending European trading arrangements the UK has enjoyed since 1973, possibly having a significant impact on the British economy.

 

With the UK construction industry’s activity at its lowest level since 2013, many construction companies have had to resort to civil engineering projects to offset the slowdown.

 

In a recent survey conducted by Smith and Williamson, 85% of construction companies voted in favour of remaining in the EU, hinting at their nervousness about a potential Brexit.

 

Access to foreign labour

 

Mark Webb, chairman of Smith and Williamson, said: “The first major issue is access to labour, without which the construction industry would be unable to function. The industry relies heavily on foreign workers to fill both skilled and non-skilled job roles, and always has done.”

 

Foreign labour is often vital to reduce skills shortages. The construction industry relies on the freedom of movement for workers within the EU. In very recent years, we as a country have seen an influx of Irish migrant workers in the construction industry due to the financial crisis in Ireland. A Brexit would result in foreign workers finding emigration into Britain more difficult, thus having an impact on the number of foreign skilled workers employed in the UK construction industry as a whole.

 

The impending referendum is creating a cloud of uncertainty other job prospects in the UK for foreign workers. As a result, this could have an effect of making other countries more attractive to labourers.

 

Exchange rates


Since the announcement of the referendum, the value of the Pound against the Euro fluctuated, having a negative impact on business operating the both the UK and the EU.

 

Investments

 

Traditionally, general elections and referendums tend to have a negative effect on sales and investment as investors play the wait-and-see game. As the outcome of the referendum is uncertain, it doesn’t fill investors or buyers with confidence in the stability of prices post-referendum, and hence it has led to a slowdown in spending and investment until the referendum is over.

 

Construction materials

Many of the materials used in UK construction projects are sourced from all over the EU. In fact, it’s estimated that up to 64% of building materials were imported to the UK from the EU in 2010. As the movement of these materials is exempt from customs duties and restrictions due to the UK being an EU member nation, the overall costs for such materials is far lower than they would otherwise be if customs and duties charges were to be applied.

 

For many business across the UK, this uncertainty has increased demand for such materials and supplies, to the extent that this will either mean a shortage of materials in the UK, to it will eventually become costly to get hold of the right supplies.

 

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