The future of the construction industry post-Brexit

The future of the construction industry post-Brexit

35167877 - construction siteAdrian Bell, partner and solicitor advocate in the energy, projects and construction disputes team at CMS Cameron McKenna, explores the implications of the UK’s vote to leave the EU on the construction industry and looks at developments that have occurred following Brexit.

How will Brexit impact on the construction sector—both short and long term?

Brexit has already had an impact on the construction industry. As shown by the suspension in trading earlier this month by Aviva, Standard Life and M&G Real Estate property funds, the immediate impact of the Brexit announcement was a rush of monetary withdrawals by international project funders who were concerned by the uncertainty and the decrease in the value of the pound. Many other private investors with projects in the pipeline are likely to postpone decisions until after EU-UK agreements are negotiated, or at least until there is a road map of how matters will develop, which may to lead to a lull in activity.

It is unclear whether this short-term concern is likely to lead to long-term issues, although uncertainty tends only to reduce business opportunities. While predicting the impact involves a certain amount of crystal ball gazing, the most high-profile result of Brexit is the potential restrictions on the free movement of people and goods. Depending on the treaties agreed with the EU, and associated tax breaks, the price of necessary materials may rise, pushing up the costs of projects. In terms of labour, the construction industry in the UK is heavily reliant upon foreign workers, and any restrictions are likely to lead to increased costs, for example in organising visas or considering workers from other markets. In the short-term, pre-Brexit, however, there may be an influx of EU migrants moving to the UK, which could increase the

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