Brexit – What next? Construction sector gives initial response

Brexit – What next? Construction sector gives initial response

On 23rd June, the UK voted for ‘ Brexit ‘ in the European Union referendum. Here is a look at some of the early reaction from the construction industry.

Melanie Leech, chief executive of the British Property Federation:

“The effect of the result has been immediate, and we are already seeing market turbulence and a fall in the pound. The priority for the government and the Bank of England must now be to stabilise the position and maintain confidence in the UK.

It is now clear that there will be political changes ahead, but we will continue to work in partnership with government and other stakeholders so that the real estate industry, which is a considerable contributor to UK GDP, can continue to support the economy and create great places.

The negotiation process is going to be long and complicated, and there will be many unknowns ahead. Our priority is that the government maintains focus on existing national priorities such as housing and that it makes decisions on major infrastructure projects, such as airport capacity and maintaining momentum around HS2, swiftly.”

Richard Beresford, chief executive of the National Federation of Builders (NFB):

“While we have a decision, there still remains economic uncertainty. What we need now more than ever are clear heads making decisions for the long term. Every £1 invested in construction generates £2.84 in wider economic benefits. This is the very time to show that the UK has the industrial capacity and intellectual capital to thrive outside the EU.”

A NFB statement also stated: ‘The NFB hopes that the Government will not repeat past mistakes of cutting capital spending to communities and local Government. Construction remains a key driver of economic performance and will need a committed level of investment over the coming years.’

Brian Berry, Chief Executive of the Federation of Master Builders (FMB):

“The UK construction industry has been heavily reliant on migrant workers from Europe for decades now – at present, 12% of the 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.”

“At the same time, we need to ensure that we invest in our own home-grown talent through apprenticeship training. We need to train more construction apprentices so we are not overly reliant on migrant workers from Europe or further afield. That’s why it’s so important that the Government gets the funding framework right for apprenticeships – when you consider that this whole policy area is currently in flux, and then you add Brexit into the mix, it’s no exaggeration to say that a few wrong moves by the Government could result in the skills crisis becoming a skills catastrophe. The next few years will bring unprecedented challenges to the construction and house building sector, and it’s only through close collaboration between the Government and industry that we’ll be able to overcome them.”

John Newcomb, MD of the Builders Merchants Federation (BMF):

“The BMF fully respects the democratic decision that has been made by the British people and in which our members, their employees and customers have participated. Our priority now is to work together in the BMF and with other trade bodies to make sure the construction industry is properly consulted and engaged in discussions with the government about the implications of the vote to leave the EU. There are many important issues to raise on behalf of BMF members about future changes that impact on jobs and the future of projects and funding that are linked to the government and in some cases to the EU.

Next week the BMF will enter a period of detailed discussions with other leading Trade Associations such as the CBI, CPA and FMB about the impact of today’s decision on our sector and a more detailed statement will be issued from the BMF Board to all Members following these discussions.”

Julie Hirigoyen, CEO of the UK Green Building Council:

“Brexit is already sending shockwaves through the construction and property sector, the scale of which won’t be clear for some time. It will be a tough trading climate, that will impact companies both large and small.

“Both economic and political uncertainty will have some people asking whether the green agenda needs to be deprioritised while business goes into firefighting mode. This must and need not happen.

“The incentives remain strong for business to address climate change and other urgent sustainability challenges. Arguably now more than ever we need to minimise future risk, reduce costs, add value for clients, generate new commercial opportunities and ensure we have the best people working as productively as possible. A sustainable built environment is fundamental to these objectives.

“UK-GBC will redouble its support of the industry, make the business case for sustainability, and explore more deeply the commercial drivers for sustainability. We will encourage an unprecedented collaboration between progressive businesses, green groups and other trade bodies. We will take the argument to Government that a low carbon, sustainable built environment is good for UK Plc, and that this requires a clear and consistent policy landscape – in or out of the EU.”

Glenigan’s Economics Director Allan Wilen:

“Contractors and material suppliers will need to be especially alert to potential disruption to the timing and realisation of projects on their order books. Glenigan can help with the identification and securing of new projects to bridge gaps in shifting workloads. Recent months have seen private sector investors delaying investment decisions ahead of the vote. We expect investors to now reappraise their industrial and commercial property development plans in light of the vote. The London commercial property market looks especially vulnerable as many financial institutions need to be located within the EU.

“The economic and political uncertainty is also likely to dampen activity in the housing market and private housebuilding activity over the coming months. In contrast the decision to leave could help boost opportunities in the hotel & leisure sector over the medium term as weaker exchange rates encourage more UK residents to holiday at home and attract overseas tourists. Near term, the flow of public sector work should not be affected by the Brexit vote. The regulated utilities, the water industry, Network Rail and the National Grid, will continue to press on with planned capital programmes agreed with their regulator.”

Iain McIlwee, chief executive of the British Woodworking Federation (BWF):

“For the UK, its people and its economy, we are entering a new chapter in history. What matters now is that firms in the housebuilding supply chain are well informed and well prepared to assess risk. From that position of preparedness, businesses will be able to ride through the inevitable period of change ahead with greater confidence and optimism, and there should be reduced impact on home builders’ production schedules.

“Some of the risks to construction product manufacturers will be immediate, such as fluctuating currency. For example, the impact on material and component imports must be factored into joinery estimates and companies must ensure they are not caught out on projects that they have already quoted on, but materials have not been secured.

“We will also be lobbying to ensure that the manufacturing sector is not left to struggle through uncertainty, but is placed in an incubator ensuring that we can start growing again, adding jobs and value to the new economy. Initially this must come through tax breaks, incentives to employ, and light touch legislation. We must also ensure that public sector procurement, now unfettered by EU policies, very carefully measures and takes into account the socioeconomic impact of decisions within specification.”

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