Impact of BREXIT on the United Kingdom’s Construction Industry.

It’s done! BREXIT has happened, and the United Kingdom have left the European Union.

The Transition Period for the settlement has started. This 11 Months will decide many vital factors of various areas for both the UK and the European Union. More than the European Union, the UK has already started suffering in multiple regions, and the impact might increase in the transition period. We are here to discuss the impact, specifically on the Construction Industry.

The significant impact will arrive on in the area of Trading | Growth | Employment. All three sectors have started suffering since the UK Government’s discussion on the Withdrawal Agreement Bill. UK citizens have shifted their headquarters and offices in Europe. People are looking forward to moving to European countries because of experiencing the dropping economy. 

Concerning the three areas, we discussed above.

Trading 

Due to the entire act of Brexit, the Tax / Tariff free trade status within the European Region will end. Paying for the tariff in the field of trading will increase the rate in export and Import.

For UK Exporters, the rate of their goods will be high for European countries, which might decrease the sales of the products themselves. For UK Importers, it will be hard to pay tariffs for importing the goods from their ex-region. Looking at history, more than 1/3rd of the imports for the UK come from the EU. Hence paying for all the 1/3rd part of the Import will be hard; an Increase in the price of imports will create inflation, which will directly affect the quality of life for the country.

Growth

The worst thing that can happen due to Brexit is its impact on the Growth of the Economy. Already the economy of the UK is dropping; with Brexit coming into the picture, it would be a severe scenario for the country. The uncertainty over the final selection of the BREXIT deal has already started hindering the processes for the economy.

Conditional to the final terms in the agreement, the Growth factor can take a different turn for/against the country. Till then, it will be uncertain.

Employment

It would be a hard journey for British People; Post Brexit, it will be hard for UK citizens to work in other countries and the same scenario for the EU citizens. Data shows that Germany will have a labor shortage by the end of 2030, and even if the UK had skilled labor to be able to work in Germany, they wouldn’t be able to. Even the companies within the UK are finding it hard to get appropriate applicants; in this scenario, things might go down the slide.

It would help if you got an overview of what impact BREXIT would create overall, let us help you narrow down the field to the Construction Industry. One of the most demanding pillars of areas.

Even for Construction Industry, significant impact revolve around the same sectors as written above

Material Cost | Labor Crisis | Residential Crisis | Skills Shortage.

Material Cost

Trade between the EU and the UK will cut off post-BREXIT is implanted, this would affect directly in materials getting imported and exported between EU – UK. Recently a data came out about the UK stating; 2/3rd of Construction materials are imported from the EU region. Imagine paying the cost for each imported material! The import limits will also hinder transport or send that much amount of quantity. Such rules put the post Brexit era in red light, especially for the construction industry.

Labor Crisis | Skills Shortage

Just like 2/3rd of construction material is being imported from the EU, +30% of Employees/Laborers working in the UK are from the European Union. In the Post Brexit era, if the employee is an immigrant working in the UK, their rights to working in the UK would be taken off immediately. Immigration changes can again result in Construction Industry facing a Labor crisis.

Construction Industry in the UK also has a lack of Skill Development and naturally Skilled and Unskilled laborers for the respective area of work. That is the reason they rely majorly on foreign nationals to work for them, and that’s where around 20-30 % of skilled laborers of the EU come into place. (As we discussed above)

Residential Crisis and Infrastructure Funding

With BREXIT coming into the picture, the relationship between banks and investors will also change. EIB (European Investment Bank) and EIF (European Investment Fund) were two parties who were supportive of funding for large infrastructural projects in the country. Still, as written above, it will all be uncertain based on how the deal is made. Due to similar uncertain investment timelines and lack of funding Such uncertain investment timelines and the absence of funding will impact Infrastructure projects. Project Delays, Projects being pushed to reduce the budget, and many other problems of the same arc can be foreseen in the future. This puts Construction Industry in a very Grey zone.

Infrastructure Project are also slowed down or delayed due to labor crisis (Above Topic). Due to the plight of skilled labor and labor shortages, in the house construction industry could face the delay in work and possibly miss out on target and deadlines given by the government. Delay and missing out on deadlines will also result in Increase in project cost for the firm. 

Here are a few things: the UK’s Construction Industry should adapt to fighting high impacts.

Delay in Project? Adapt to Best Technologies.

If we are facing delays in funding and storage of materials, we should target optimizing the time for the pre-construction and construction process. So example, if the funding and storing of materials to ½ of the time, we need to challenge ourselves to complete the Pre-Construction and Construction work in another 1/4th of the time. Such tactics will help us to save the other 1/4th of time for the post-construction process, and we can get things done in less time comparatively.

In the pre-construction process, BIM Services can fast track the process and make the entire process efficient and accurate enough to get better results. BIM will help in creating a model where each method can be seen and experimented; errors can be tracked and improved immediately; it increases the communication between engineers-contractors-architects, which again optimizes the time. It is just an example of using technologies. An example might look small, but whatever is coming ahead for the UK Construction Industry, such short steps/examples can also play a pivotal role.

Might face challenges with labor? Outsource! 

“Outsourcing Work” isn’t a new term nowadays, especially not for the Britisher’s. If the professionals from the construction industry can foresee the challenges that are coming on the way due to Brexit, they should be agile to take action, which minimizes the damage. Forming partnerships with outsourcing firms across the globe should be a way to go.  

Outsourcing Services play a significant role in the Pre-Construction Period; it can fasten up the process and help the firm get things done on time. Construction Documentation Services, 3D rendering, MEP Shop drawing services, etc. are available for use. 

Meanwhile, Industry working through Outsourcing Services it shouldn’t be a permanent solution. The government and Construction Industry should take initiatives in improving the skills of UK citizens, which will only help themselves in the long run.

The above-shared piece of content was the overview according to us, what we feel about BREXIT and its impact on the construction industry along with few small yet efficient and robust solutions to challenge and fight the same effect. 

If you think anything else needs to be done by the UK’s Construction Industry; Let us know in the comments.

If you have any other point from any discussion or want to write about anything else, let us know in Comments.