Construction industry reacts to EU Leave vote

June 2016

map_200Britain has decided its destiny lies outside the European Union following a historic referendum that saw 51.9% of voters vote Leave.

Leave won the majority of votes in England and Wales, while Scotland and Northern Ireland backed staying in. Turnout was 71.8% with 30 million votes being cast.

The result means that after 43 years of membership, Britain is set to take steps to leave the union – a process that may take several years to complete. Greenland is the only country to have ever voted to leave externallink, way back in 1982 and it wasn’t until 1985 that negotiations were finally completed.

Prime Minister David Cameron who had campaigned to Remain announced that he is to step down by October. This means that a new Prime Minister would carry out negotiations with the EU and envoke Article 50 of the Lisbon Treaty which would begin the exit process.

 

Clearly there is uncertainty about the timescales and impacts on a range of issues important to our industry including free movement in the EU for architects as well as students, trading and material sourcing, inward investment relationships, EU procurement rules and the effect on the construction sector if restrictions are placed on EU migration.
– Jane Duncan, RIBA President

Construction industry concerns

Uncertainty around the result of the EU referendum has made the construction industry nervy in recent months with many firms putting off new projects until the result was known.

The Purchasing Managers Index for the construction sector has showed business activity has dropped to its lowest level since June 2013 and a majority of firms have reported a fall in orders for the first time since 2013. Headline activity fell to 51.2 in May down from 54.2 in March with the slowdown being felt across residential, commercial and civil engineering sectors.

Many big players in the construction industry had warned on the dangers of a vote to Leave. Galliard Homes, London's largest private house builder had predicted a drop in the London property market and a rise in costs by up to 15% with projects in jeopardy given their reliance on workers from across EU countries.

The Federation of Master Builders have called on the Government to ensure that any new system of immigration provides the construction sector with enough skilled workers to build the homes and infrastructure projects the country needs.

FMB Chief Executive Brian Berry said: "At present 12% of British construction workers are of non-UK origin.The majority of these workers are from EU countries such as Poland, Romania and Lithuania and they have helped the construction industry bounce back from the economic downturn when 400,000 skilled workers left our industry, most of which did not return. It is now the Government’s responsibility to ensure that the free-flowing tap of migrant workers from Europe is not turned off.

“If Ministers want to meet their house building and infrastructure objectives, they have to ensure that the new system of immigration is responsive to the needs of industry.”

The director of UK Steel, Gareth Stace, has released a statement saying the decision for the UK to leave the EU will send shockwaves through the UK steel industry.

“Government now needs to fully and finally tackle head on the uncompetitive electricity and policy costs that have historically hindered the growth of steel producers and seen thousands of high-skilled jobs lost over the last year.

“We need to see all major projects, from HS2 to Hinckley Point to airport expansion, all using British Steel instead of procuring from foreign companies that offer no social value to the UK and its communities and economy.

“Government can now match words with actions and take the lead in dealing with subsidised exports, most notably form China, that are slowly destroying steel making in the UK. It must come up with clear and concrete actions to ensure that we can still trade with the EU, while at the same time ensuring that trade tariffs have the teeth to guard against dumping of Chinese steel.”

The view from RIBA

RIBA President Jane Duncan has said: “The RIBA is a global organisation that supports its members, validates schools of architecture and champions the importance of a quality built environment around the world. UK architecture talent is incredibly resilient and we will continue to ensure that our profession has a bright future, whatever the operating evironment.

“Clearly there is uncertainty about the timescales and impacts on a range of issues important to our industry including free movement in the EU for architects as well as students, trading and material sourcing, inward investment relationships, EU procurement rules and the effect on the construction sector if restrictions are placed on EU migration.

“In common with other UK businesses and organisations, the RIBA is assessing the short and longer term effect of the withdrawal on our members and the Institute will provide further guidance in due course.

“Most importantly, we will work with colleagues in industry and government to ensure that architects have a strong voice in the coming weeks, months and years".

The early impacts

While too early to tell what the long term implications and effects will be, the pound fell to its lowest level against the dollar for more than 30 years on Friday and shares of leading commercial clients fell sharply before both made back some ground. The Bank of England said on Friday that it would take all necessary steps to shield Britain's economy and is monitoring developments closely.

Update: Don't miss our EU Referendum Survey findings distilled by Adrian Malleson

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