How has Brexit impacted the confidence in the construction market?
2017 saw Brexit take a hold of the nation, causing many issues for all sectors of society. The UK remains uncertain of the full impact the referendum will have on the country – and how it will affect the construction industry.
Companies that operate in the construction industry tend to employ workers from the European Union – due to the lower costs and high standard of work.
These cheaper labour costs result in higher profit margins for businesses – which is why EU labour has previously been sought after.
Brexit negotiations are speculated to directly impact the cost of EU labour – which could have a direct impact on the profit margins made by businesses. This could have a knock on effect, preventing some businesses from tendering altogether, as the amount earnt will not be enough to sustain the whole project.
As a member of the EU, the UK had access to both the European Investment Bank (EIB) and the European Investment Fund (EIF). These institutions invest in major infrastructure projects, which have a significant impact on the delivery of large infrastructure projects, as well as start-ups across the UK.
Although this revenue could be replaced from EU membership savings, it is unlikely that this saving would be spent on infrastructure projects – with the current financial climate. The loss of funds could also have a knock on effect on the the government’s national housing targets. The recent collapse of Carillion, a billion pound facilities management and construction company, has created panic for thousands. The government vowed to protect construction projects with funding, however, action is yet to be taken. This is just an insight into the current state of the British construction market.
However, the UK does have several strengths that it can use to propel itself. The government and various professional associations have found ways to market themselves to the world outside the EU. In the wake of the Brexit vote, the Mayor of London launched the “Londonisopen” campaign. This is a fun, creative opportunity to showcase London’s skills with an underlying agenda.
More and more creative opportunities can be generated with marketing and communication tools, with professionals taking the lead and SMEs finding innovative ways to market themselves outside of the EU.
Brexit will no doubt cause a shift in the foundations of the construction industry. The government is in talks working on a plan in order to ensure that industries such as this do not get severely damaged by the repercussions of Brexit. Let’s hope their planners are as thorough as the ones within the construction industry!
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