Over 25 members attended the Brexit Briefing on 20 July with Neil Edwards, CEO at Builders’ Conference, giving an overview of the market.
Members engaged in an active discussion, with the overall concensus that uncertainty is the biggest risk. The following topics were raised and pose questions for our sector.
The private sector is spending more than the public sector, but this may change.
There is expectation that public sector spending will increase on infrastructure projects and although project numbers appear the same, the value is falling.
There are 700k planning applications each year of which @50,000 are of interest to the construction sector.
There is no sign of this slowing but this does not necessarily translate into projects.
Local authorities currently have little in the pipeline but can mobilise quickly if required.
Airport (both Heathrow & Gatwick), Thames Tideway, Rail HS2 & Nuclear build are 4 key projects already in the pipeline.
Commercial project tenders have levelled off.
European spending in UK will decrease.
Builders’ Conference are anticipating a recession lasting perhaps 12 months.
Possible decline in speculative housing. First time buyers are already offering 8% less than the asking price, this could be reflected across housing to a lesser extent.
New Mayor is reviewing all projects, and may defer or delay some.
Easyjet may relocate to Dublin where they have already agreed a second runway, and being based in EU will give them access to routes.
Office space in London is at a premium. Uncertainty is likely to slow things down.
There are indications that some Architectural practices are reducing their head counts.
Uncertainty is the BIG Risk.
Recession in the economy: coping with it and holding on to key staff.
Product standards: can we stick with BS EN standards?
Labour: Eastern Europeans make up a large percentage of the labour force and if we want them to stay (if work is available) they will probably want to stay, but need clarification from Government to reassure them.
Concerns that people will not want or not be able to migrate for work. They may still come from elsewhere in the world (such as India?)
Impact of a points system: how would it affect craft labour?
Labour costs may increase.
Legal frameworks need clarification.
Inward investment: will UK PLC still be seen as a safe investment? Would dropping Corporation Tax make us more attractive?
Economic activity: could we benefit from lower regulation from Brussels?
Tariffs: not likely, but would have a big impact.
Labour Agency workers are made up of foreign individuals. If they leave, what is the impact on our economy and workers, lifters and shifters? Will this result in a price increase and is there appetite to carry out unskilled
manual work from UK workers?
Product: risks of price increases with fluctuations in currency, for example importers currently paying 8% more.
Increase in taxes and VAT would be a big threat.
Labour shortfall may lead to increased costs.
Import duties would impact UK.
Inward investment may reduce.
Many Architects employ foreign staff but would probably qualify on a points system for immigration.
Can we train and qualify more people in the UK?
Government and industry should look to ‘up the profile’ of construction to future generations: Make it part of a curriculum.
Can UK raise the profile of construction through training and education with incentives? Skilled trades? It may increase the opportunity for UK manufacturers who will be in a better place to compete against imported products.
UK PLC is still seen as the leaders in innovation, quality and design.
Export opportunities: Sell ‘Brand Britain’.
Increase trade with non EU countries.
BIM will provide worldwide opportunities.
A less regulated economy will benefit UK.
Our own trade agreements outside of Europe will provide new opportunities.