Before the Brexit referendum on June 23rd a poll was taken of senior figures in the construction industry.
The results were almost unanimous.
And, as it turned out, they went against the national grain.
The survey by financial group, Smith & Williamson, revealed that only 15% of property and construction executives in the UK favoured an exit from the EU.++
Paul Manchester, director of Manchester Safety Services, expressed some fairly typical sentiments:
“Leaving the EU could upset the balance and inhibit the growth and confidence within the industry.
Uncertainty surrounding the global economy, taxation and access to funding could remove a layer of security from the UK’s construction industry.
This potentially could lead to an increase in conservatism practiced by construction executives, unwilling to take risks in an unknown financial landscape.”
Many of these fears and concerns were to be immediately realised in the weeks before the vote and in those that have followed its result.
Britain’s builders had their worst performance in seven years in June thanks to a collapse in new orders that clobbered firms in the run-up to the referendum.
As investment plugs were pulled, and housing market jitters set in , some existing projects were mothballed and new work became thin on the ground.
The monthly Market survey indicated that all parts of the industry were affected and business confidence was at its lowest for three years.
And this survey reflected the situation before the result was announced.
Tim Moore, senior economist at Markit, said:
“Construction firms are at the sharp end of domestic economic uncertainty and jolts to investor sentiment, so trading conditions were always going to be challenging in the run-up to the EU referendum.
However, the extent and speed of the downturn in the face of political and economic uncertainty is a clear warning flag for the wider post-Brexit economic outlook.”
This certainly looks like it may be the case: shares in Britain’s biggest property developers and builders tumbled immediately after the EU referendum result emerged.
Construction and the EU
Why was the support to remain so high in the construction sector, and why has it been hit by the inevitable uncertainty that follows our decision to leave.
Here are some of the factors at play.
- Access to labour – The free movement of labour between the UK and other EU member states is a valuable asset to the construction industry – 12% of our three million strong workforce are EU nationals.
- Access to resources – Similarly the EU has simplified the process of importing resources, tools and materials from other member states, and as our industry develops, these will only diversify further.
- Access to investment – House building particularly relies on a constant stream of overseas investment and, with more than one million new homes needed by 2020, this investment is critical to our industry and the wider economy.
- Access to funding – Funding streams such as the European Structural Investment Fund (EUSIF), European Regional Development Funding (ERDF) and Joint European Support for Sustainable Investment in City Areas have provided millions of pounds to green light construction projects across the UK. Will we still benefit from these?
So, what will Brexit mean for you?
The ‘remain’ ship has sailed off into the sunset, so it is time to deal with what comes in the wake of its passing.
It certainly looks like there may be some stormy seas ahead for the UK construction industry, but we’ve weathered storms before and we’ll navigate our way through this one.
We’re ready to ride the Brexit waves by relying on our ethos of service, quality and value.
They have served us well through ten years of growth – and we’ll continue to rely on them for growth through the years ahead.