Food for thought for a post EU construction world

In a weekend that saw some good reasons to smile – Murray, Watson, Reid and Whiley showed the world that the UK has a strong tennis core coupled with Hamilton bringing home glory on the track. The only dampener was Portugal showing the world that you can under impress in football and still win!  

The future of the country is now defined (or not as the case maybe). The UK has decided to leave the European Union but what that means is still very much unclear – we’re not even sure who will be leading the conversations to determine our “settlement” package. The world has not ended yet and as such all the suggestions of bad and good really have no consequence.

Construction, well the majority, has never really been a fan of Brexit. Whether a consultant or a contractor they were reliant on skilled (and I mean skilled) EU labour to fill the gap left by our own poor investment in talent and aging population but it is more than simply just labour:

·        So it is highly likely the EU will leave the single market therefore ending the freedom of movement. According to the government 12% of the construction industry workers comes from aboard, largely the EU. Recently it was estimated that we would need to train 224,000 to meet the shortfall. So what happens next – well wages rise (yes that is a good thing) as the lack of labour is fought over;

·        In terms of the materials used in construction – well the pound has fallen and given a significant amount of materials are purchased from the EU it is expected there will be a longer term increase in materials. So that will be a double whammy.

·        The investment in the construction sector is expected to drop and therefore has been a few isolated instances of this already occurring, for example Standard Life. Now I say isolated as at present the whole sector is unsure – have prices fallen? Who knows because the market isn’t really being tested at the moment and we’re now into summer break so it maybe the Autumn before we know for sure. What I do know is there is a lot of activity behind the scenes on hold – the question is will it ever materialise or vanish into the ether. There are certainly some who see this as an opportunity to invest in the UK.

·        We had lived and hoped of zero carbon homes by 2016 until they were scrapped in the Housing and Planning bill – this in turn was driven by EU Directive requiring all buildings to be nearly zero energy by December 2020. Now its unsure what we’ll do with the regulation, but Leadsom seemed to be supportive so it may still stick around.

So the impact on the industry could come in many forms – positive or negative. It is clear what the overall industry view is but now is the time to look to the future and work out what does the industry want to be its legacy and how can it shape some of the above for the benefit of the future.

Feel free to contact me 0113 288 2276 or lee.a.wilkinson@uk.pwc.com if you wish to discuss this blog or anything relevant to property and construction.

Enjoy your week

Lee