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3 Brexit Challenges Facing Construction

With the UK aiming to leave the European Union by as soon as March 2019, the construction sector has many obstacles to overcome before then.  The construction industry, relies heavily of labour, raw materials and investment from the EU.   This could prove to be a triple whammy for the sector and it is important these issues are raised early, in preparation for our departure from the EU. We will look at, what have become to be regarded as the three biggest challenges.

The Labour Market

It is estimated that up to a quarter of all the skilled and unskilled workers in the construction sector come from the European Union, with up to 170,000 of them working in London.  The sudden withdrawal of all that labour could seriously harm the capital, and the country, socially, politically and economically.

The problem could be helped by

  • Allowing all EU nationals who currently live in the UK to remain
  • Supercharge training facilities for UK citizens who are trying to get into construction
  • Be prepared to put major resources into training and upskilling people.

Building Material and Machinery

Much of the materials used in construction and the machinery used in construction come from EU countries. Under current arrangement, while we have freedom of movement between EU countries, accessing this machinery and material is relatively easy.  With the public mood of enforcing trade barriers, getting these materials could prove very costly, if government decides to increase taxes on imports and make importing more difficult.

This potential rise in the cost of materials and machinery is being compounded by the fall in the value of sterling, which has already seriously damaged our buying power abroad and increased the costs of buying here.

To help us cope with the rising costs of building materials and machinery we need to look at

  • Ensuring there is still easy movement of goods and services across our borders with the EU
  • We need to examine way of protecting sterling so that inflation in the sector, and across the economy, does not get out of control.

Challenges in attracting Investment

As businesses in every sector examine how their business model would work operating outside of the EU, many are coming the conclusion that they may want to move a large part of their operations to a suitable EU country, leaving the UK as an outreach to the main part of their companies.  If this becomes the trend among large business, it could be very damaging for construction.

Direct investment made by the UK into some of the more deprived areas of the country will stop abruptly, effecting places like Wales and the north of England disproportionately. The EU currently has a fund, the EU Structural and Investment Fund, which seeks to help the poorer regions of the EU. All this investment is directed at places where is it needed the most will disappear unless the government decide to prioritise these areas as targets for inward investment.

While much of what we have looked at is said to flag our concerns over our departure from the EU, it is important that we do not become so pessimistic that cannot make plans beyond March 19.  The construction sector has a big part to play in lobbying government to make decision that will help in continued investment and development in the industry.

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