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An abstract overview of Brexit’s effect on the UK construction future

United Kingdom leaving the European Union represented in puzzle pieces.

A worrisome state is currently taking place among the professionals working and involved in the construction industry in the UK. Since the historic Brexit referendum in 2016, a certain level of uncertainty has surrounded business owners and employees in the country. Several precautions are being put out on the table, allowing market experts to analyze the Pre-Brexit phase and the Post-Brexit phase. Although the influence of the Brexit on the construction sector in the UK remains unclear, preparing for future challenges is very much called for. Among the several concerns that have been addressed is how it might affect the industry’s stability from construction materials and skills shortage to infrastructure funding.

By the end of 2018, the UK construction sector faced a slowdown in activity according to the Markit/Cips UK construction PMI, presenting market challenges vividly. Brexit uncertainty has caused a fall in the UK construction productivity and led many projects to go on hold, marking the second-longest delays for deliveries since the year 2015.

Followed by a state of hesitance, construction firms in the UK are still analyzing the situation, whether the final agreement goes under the umbrella of a soft Brexit or a hard Brexit, the transitioning period requires a lot of in-depth strategical thinking. The industry professionals need to use the time left to the official Brexit Day (October 2019) wisely, planning for large upcoming projects with timelines based on concrete facts.

BREXIT AND THE CHALLENGES PRESENTED

The potential impact of a post-Brexit phase presents few challenges for the professionals in the market.

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  • Workforce shortage
    According to RICS, it is believed that a soft-Brexit will make the industry lose up to 136,000 EU workers, while a hard-Brexit scenario would make the UK lose almost 214,000 workers. That concludes to a solution for the UK to seek out and recruit more than 400,000 people a year, with the intention to avoid delay deliveries in the housing and infrastructure sectors.
  • Construction materials
    The UK trading business with the EU is highly dependent on bilateral relationships between both, recording an estimate of 64% of the building materials used in the UK is imported from the EU, worthy of £ 2 billion. Nevertheless, the cost of the separation and the end of the existing free trade agreements.
  • European funding
    Although the terms and conditions of the separation have not been addressed yet, it is expected that the negotiations would lead to a huge financial shortage, hitting the market directly and impacting the large-scale projects of the country.

Regardless of the outcome of the negotiations, many construction firms in the UK have decided to put the projects on hold and to delay the key investments until the situation clears up. Whereas other firms had reported that they are retaining staff, in preparation for the Brexit conclusion.

‘’Dropped like a stone’’ is how the Guardian described Britain’s construction industry performance in June 2019, declaring that it is hitting the lowest performance rate in more than 10 years. Who to blame? Firms had agreed to blame the Brexit situation.

Whilst the market is still experiencing a tight room for maneuvering around the industry and the Brexit impact on it, a sector-wide survey was held by meanwhile the rest of the survey takers either believe it will carry on a negative impact or not certain of the impact at all.

Another part of the conducted survey showed that 92% of the respondents declare that they do not rely on EU migrant workers and would rather use skilled UK workers. Moreover, 17% highly advocate for their freedom of movement and maintaining that as a priority.

THE B-EFFECT ON THE HOUSING SECTOR

The level of uncertainty keeps getting more intense, putting the residential market in the UK at a stake. ‘’It appears that those looking to buy and sell homes across the price spectrum, as well as those looking to invest in the UK’s residential sector, are putting off decisions until there is more certainty.’’ Said Hew Edgar, Head of Policy at RICS. Not so long after conducting a survey that reflected the number of factors influencing the new buyers and impacting on real estate agents, but more importantly if it settles to a no-deal Brexit.

The second quarter of 2019 marked the biggest increase in house prices since early 2017, rose with 5.7% following a 5.2% increase in the previous three-month period. Edgar then added: ‘’ Prior to the referendum, our research indicated that Brexit would only impact the higher end of the residential market, as the lower and middle market areas are domestically driven. Now, however, it appears that those looking to buy and sell homes across the price spectrum, as well as those looking to invest in the UK’s residential sector, are putting off decisions until there is more certainty. ‘’

In conclusion, people in the UK had exhausted the debate of affordability, it is a long topic of debate, encouraging everyone to seek out for realistic solutions such as co-living. To illustrate, construction companies are in a critical need to improve quality, meet the global safety standards, satisfy clients’ demands and improve own productivity. But is that achievable with Brexit’s impact still being hazy? The construction sector is constantly representing new challenges and obstacles, making firms lean towards technological solutions that would allow them to stay ahead in the game.

At PlanRadar we believe in digital construction and how it enables your business to overcome any out-of-hands challenges that might disrupt the route of progress. While political uncertainty continues to cause insomnia to field professionals, a solution as simple as a cloud-based platform presents itself, resolving the concerns around the shortage of resources.

With a deep understanding of the value of time, we have developed a system that appreciates time and its correspondents. By acting as the digital arm for any construction firm that aims to facilitate any project comes in hand, delivering fully-fledged results.