Little to gain from Brexit?

Building’s latest survey of construction portrays an industry that expects a Brexit event to have a major impact on its business, and is already seeing some impacts - but which is not actively adopting a position on the referendum.

Given construction’s reliance on overseas labour in both consulting and construction, it is not surprising that industry professionals take a dim view of the prospects for Brexit. What is more interesting is the expected impact.

Roughly 40% of the survey anticipate that housing, infrastructure and public sector markets could be negatively affected, even though these sectors are largely insulated from variations in levels of overseas demand.

Respondents are probably more concerned at the moment about construction’s ability to maintain current levels of output rather than worrying about future demand. However, the industry rightly recognises that the commercial sector, easily the most international given high levels of demand from overseas investors and occupiers, is the most exposed to longer-term change associated with a vote for Brexit.

Survey responses highlight equally high levels of concern in connection with foreign investment as well as access to labour and materials. Supply-side worries associated with labour and materials are more likely to be a long-term problem but in the short term could contribute to uncertainty amongst the UK’s migrant workforce while new policies are enacted.

Unlike other UK industries, construction has a very small exposure to export markets, so the business logic for Remain is less compelling than it might otherwise be. Given the potential scale of disruption suggested by the survey, construction businesses should review their contingency plans across all sectors – not just those immediately exposed to Brexit risk.

Simon Rawlinson, head of strategic research and insight at Arcadis UK