Building industry holds breath after Brexit vote

Fears over environment, skills and investment

CIBSE Journal July 2016 David Cameron Brexit

Cameron announces his departure

A wave of uncertainty has hit the construction industry after the UK voted to leave the European Union (EU) in the referendum on 23 June.

Industry experts have expressed concern about what the vote will mean for UK’s infrastructure, investment, skills and the environment.

Hywel Davies, CIBSE technical director, said: ‘The vote to leave creates enormous uncertainty that will distract many in UK construction and engineering from the significant challenges that face the MEP sector worldwide: digitisation of the sector and the drive for greater resource efficiency together with the demand for the skills to deliver. ‘

Dorte Rich Jørgensen, sustainability consultant engineer at Atkins and member of built environment think-tank The Edge, was concerned about the loss of EU funding in the sector.

She said: ‘Businesses need stability and investment, and there is uncertainty about how this will impact UK commerce, jobs and prosperity.’

As an EU member state, the UK has access to the European Investment Bank (EIB) and the European Investment Fund, which last year invested €7.8bn in infrastructure projects, and leant €665.8m to SMEs.

Up to 60% of funding for some infrastructure projects – such as Crossrail and HS2 – comes from the EIB, which last month also announced £280m of funding for the expansion of UCL facilities and £700m of finance for the Thames Tideway Tunnel.

...Brexit facts

  • The Leave camp won with 51.9% of the vote, to Remain’s 48.1%
  • Cameron said he would stand down by the time of the Conservative party conference in October, and a new prime minister would invoke Article 50, triggering negotiations for Britain’s withdrawal from the EU, which could take two years
  • The vote has had an negative impact on markets: the value of the pound fell dramatically, at one stage hitting $1.33 – a fall of more than 10% and a low not seen since 1985
  • The stock exchange fell 8% in response.

There are also fears that the London economy could be impacted by the vote to leave, reducing engineering output.

Other engineers warned there may be fewer opportunities for UK firms in the EU unless they already had offices in Europe, and that the outcome would affect industry’s ability to recruit engineers.

The cost of labour is set to rise significantly according to some housebuilders, whose shares fell by up to 40% following the Brexit decision.

Monika Slowikowska, founder of Golden Houses Developments, said: ‘The cost of labour in construction has increased by an average of 8% in the last six months and it’s set to keep rising. By leaving the EU, and based on our projects, we predict that this could increase by an extra 15 to 20%,’ she said.

Brian Berry, chief executive of the Federation of Master Builders, added: ‘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 Leave vote means we will have to look again at the Energy Performance of Buildings Regulations in the UK, which deal with energy labelling and nearly zero energy buildings.

Robert Cohen, director at Verco, said: ‘We could have a better tailored set of regulations, but is there the ambition to have a far-reaching policy as we had when influenced by the EU directive?’

The Climate Change Act establishes a target for the UK to reduce its emissions by at least 80% from 1990 levels by 2050, but Cohen questioned whether it will survive under a new government.

The UK’s energy security is also uncertain, said Michael Grubb, Professor at UCL’s Institute for Sustainable Resources. He said the ability to import cheap energy from adjoining European countries will be diminished if a trade deal cannot be struck.

Grubb said: ‘You require a physical connection, and the only entities we can connect to physically are mainland European continents. There is no possibility of offsetting electricity trade losses with the continent, by trading electricity elsewhere’.

Despite the uncertain times, industry professionals urged people to remain positive.

Davies said: ‘We must stay focused on addressing the challenges of digitisation, resource use and skills while working through the consequences of the vote.’

Jørgensen added: ‘We need to use this to our advantage and as an opportunity to raise our game.’