The UK’s European Union membership referendum took place on 23 June 2016, resulting in 51.9% of voters voting in favour to leave the EU.

The Prime Minister has stated she wants the UK’s exit from the EU to be beneficial to British businesses, allowing the maximum freedom to trade and operation in the single market, whilst still maintaining a fully independent country able to make its own decisions.

A great deal of uncertainty remains regarding the impact of the Brexit decision on the UK’s construction industry which is expected to have an impact on investor confidence especially in the short to medium term. The heightened political uncertainty has led to concerns that skilled labour from outside the UK will slow down, labour and material costs will rise and there will be increasing legislation on imports and exports.

The government’s Brexit White Paper can be viewed here.

The lack of certainty or a clear plan from Westminster means that the risk of a no-deal Brexit is rising, whether by design or by accident.  The CPA, however, does not believe a no-deal is a viable solution for our industry or indeed the greater good, and therefore urge that it should be avoided at all costs. 

Even now, the continuing inability of policy-makers to agree a way forward has left the vast majority of our members – multinationals and SMEs alike – struggling to overcome the market uncertainty currently impacting their businesses.  Contracts for new major offices projects, for example, have fallen sharply since the EU Referendum due to concerns from investors over long-term economic prospects and returns.  Similarly, infrastructure forecasts are increasingly being revised down as projects are delayed or cancelled. 

All this comes whilst CPA members seek to properly prepare for an unknown future after March 29th.  As in other sectors, they are spending valuable time and resources on stockpiling and warehousing, auditing and guaranteeing the resilience of their supply chains, and vetting contractual risks and obligations.  Notably, since the construction industry and particularly the products and materials account for the largest users of the UK road network, our members are very exposed to logistics factors including finding alternatives to expected gridlock in the South East.   

Unfortunately, however, we must recognise that such planning is the exception, as most of our industry is comprised of SMEs who are frankly unprepared for leaving the EU without a deal.  They are often either poorly resourced to prepare or cannot make sense of the mixed signals coming from policy-makers, regardless of how many technical notices are issued by DExEU.  We have good reason to believe this reflects similar problems in other industries as well.

Clearly, a no-deal Brexit would not merely exacerbate an already difficult market environment; rather, it would in all likelihood bring massive short-term disorder and potentially long-lasting damage.  This would fall not only upon our own workforce and businesses, but on millions of our clients and end-users ranging from homeowners to government agencies and local authorities who we will rely on to grow our businesses.  

A tremendous price has already been paid and numerous opportunities lost over the past two and a half years since the Referendum, as politicians and civil servants have had little time for anything but Brexit.  Critical policy areas where construction is key have suffered as a result – housing, infrastructure delivery, manufacturing investment, energy efficiency, skills and training, to name just a handful – all to the detriment not only of industry but society as well.  We cannot help but fear that a no-deal Brexit would simply prolong this situation indefinitely.

With the impact of the previous financial crisis not forgotten in an industry that experienced countless business failures, plant closings and nearly half a million job losses, the resilience of our industry has its limits.  It is vital that Government and MPs of all persuasions speak to firms across construction and the wider economy in their constituencies to understand fully the issues, work together quickly to ensure that no deal is not an option and agree on a solution that ensures a deal in the best interests of the construction industry and UK economy.