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Theorizing Brexit’s Effect on UK Construction

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With the March 29 deadline rapidly approaching, time is running out for Parliament to approve a plan for the United Kingdom to leave the European Union. But despite the looming urgency, what fate has in store for the ongoing Brexit negotiations seems completely up in the air.

What is certain is that a UK exodus from the EU would have a profound impact on most sectors, including the construction industry. This blog post aims to consider how the biggest issues facing the UK construction industry might be affected by Brexit.

Further Labor Shortages

While the UK construction industry’s ever-aging workforce has been a concern for well over a decade, Brexit has pushed the issue up to the forefront. According to the Office of National Statistics, 7% of UK construction workers are citizens of EU 27 countries. Younger than Briton construction workers on average, these individuals may face greater difficulty entering the UK post-Brexit. For an industry in desperate need of new blood, losing out on these workers would be a serious blow.

In response to this labor shortage, UK construction firms are looking to automation to achieve more with fewer workers. Through greater skilled workers and digital construction techniques, companies aim to spend less time devoted to paper processes and more time on the job site.

Supply Chain Complications

Trade is one of the most hotly debated aspects surrounding Brexit for good reason. By leaving the EU, it’s possible that UK construction firms will find it more costly and logistically complicated to source the materials they need. With new trade deals still unwritten, many companies are choosing to stockpile materials in advance of the Brexit deadline. In addition to risking theft and stock value depreciation, this panic buying can lead to material and equipment shortages, resulting in further price increases.

Funding Challenges for Infrastructure Projects

Even before 2016’s historic referendum, finding the funds for major infrastructure projects was no easy task. By leaving the EU, the UK has severed its access to the European Investment Bank and the European Investment Fund. Combined, these revenue streams contribute billions to infrastructure, renewable energy, and social housing projects to EU members. Without this funding, much needed infrastructure projects will be forced to secure funds from alternative sources. Should this process prove difficult, infrastructure and other public interest projects may meet significant delays.

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