Brexit Impact on Construction: An Update

It’s now been over two years since the EU referendum vote took place in the UK, and you might remember that we wrote a piece about what the possible impact Brexit might have on the construction industry. At the time, things had held steady, but with two years now elapsed and a deadline looming, it’s time to reassess what Brexit might mean for the UK construction industry.

How is the construction industry doing?

After a fall in growth of 0.8% at the start of 2018, the industry recovered by growing 0.9% from April to June. Repair and maintenance work was mostly responsible for this, according to the Office for National Statistics, while new work has remained flat. Since the referendum vote in 2016, growth has remained relatively flat overall, presumably while companies wait to see what the government’s firm plans are.

Recent headlines have put a dampener on the positive second quarter figures however, with the Purchasing Manager’s Index (PMI) dipping to 52.9 this month – down from 55.8 in August 2018. This figure is closely watched, with a number below fifty suggesting that the sector is in contraction.

What will happen after 29th March 2019?

Plenty has happened over the last two years, but there is also still plenty of confusion about what a post-Brexit Britain will look like for the construction industry.

The right for EU workers to stay after Brexit is made official appears to have been wrapped up, with the government promising quick decisions and an easy way for people to apply to stay. This will be welcome news for construction companies who employ EU nationals, ensuring their skilled workforce remains in place. The prospect of hiring EU nationals from abroad in future looks as though it might be slightly more difficult though.

There have been accusations from some that the government haven’t communicated enough with the industry about Brexit – both on how to cope or what the implications will be.

It seems unlikely that we’ll see high levels of investment in new projects until the dust has settled. This will mean that the sector faces a struggle in the run up to 29th March 2019, especially since there has been a slowdown in housebuilding recently.

Key areas to watch

So many factors are involved in how well the construction sector performs, it’s worth keeping an eye on the news to see if any other following are mentioned in either positive or negative terms:

  • Workforce
  • Materials
  • Regulations
  • Funding

The intricacies of any of these aspects of Brexit could have a wide ranging impact on the sector, with negotiations needed to ensure a smooth relationship still exists with the EU after March 2019.

Regarding the trepidation over whether there will be a “no deal” exit from the European Union, the uncertainty would surely not help the industry. Only when the relationship between the UK and the EU has been agreed and laid out will confidence return, but this could take time – possibly going beyond the March 2019 date, which would only bring more stagnation in the market.

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