The construction and infrastructure industry is one of the largest sectors in the UK, it employs around 3.1 million people, around 9% of the total UK workforce and has a turnover of £370 billion.1 On the 24th December 2020, the United Kingdom and the European Union agreed a post-Brexit trade agreement which came into effect on 1st January 2021. Brexit had an impact on most sectors within the UK and the construction industry has felt the impact since the referendum in 2016.
The construction industry relies on foreign migrant labour for skilled and non-skilled roles and has benefited from the free movement of labour from other EU member states. The number of EU-born workers within the industry dropped from 176,000 in the third quarter of 2019 to 127,000 in the same period in 2020.2 The possible skill shortage may restrict the ability of the industry to deliver projects on time and inflated costs could see some projects become unaffordable. The reduction in workforce could affect the capacity of housebuilders to meet the government’s housing targets, with cost increases possible for the housing market and construction companies, this could also deepen the housing crisis.
EU membership allowed for the free movement of goods within the EU without duties and other restrictions, in October 2019 the UK imported 62% of its construction materials from the EU and exported 57% to the EU.3 One major concern from a no-deal Brexit was the potential for prices of building materials to rise due to tariffs. The trade agreement allows the importation of goods including building materials to remain tariff-free, however customs declarations need to be made when importing or exporting goods which could lead to increased delays, with Covid-19 already impacting supply chains.
Brexit will also mean the UK no longer has access to the European Investment Bank and the European Investment Fund which together have invested €7.8 billion in major infrastructure projects and lent €665.8 million to SMEs in 2015.4 The loss of both of these revenue streams could have a significant impact on big infrastructure projects across the UK.
Whilst the trade agreement has alleviated some of the more serious issues regarding a no-deal Brexit, it has not removed every complication. Businesses will still need to consider the impact of Brexit on their business and adapt accordingly.
