Construction frustrated by Brexit uncertainty as industry readies for materials shortage

Construction firms have expressed their anger at the continued uncertainty around whether or not a Brexit deal will be reached after yesterday’s high-stakes deadline was extended and negotiations moved into what one commentator called “extra extra time”.

Sunday had been the deadline day for such a deal to be reached, but the UK and EU have announced they will extend the talks indefinitely – meaning a deal could still be reached right up until midnight on 31 December.

The continued uncertainty leaves the industry in a nightmare scenario as it struggles blindfolded to plan for the impending divorce from Europe.

One contractor, who asked not to be named, said: “It’s a disgrace to leave industry in the dark like this with just a few working days of the year left.”

Former head of the civil service Bob Kerslake, who is the chair of both Pagabo and Peabody, told Building it was imperative that a deal was reached.

He said: “Things like supplies are crucially important at the moment. It creates huge uncertainty which everyone is trying to manage through their contracts.

“A deal is really important and the uncertainty and potential costs could have a material impact on how fast we are able to get on with major projects. There is a lot hanging on these last-minute negotiations.”

Contractors have begun bracing themselves for inevitable delays to materials coming to sites from Europe – even if the UK reaches an 11th-hour trade deal with the EU.

Firms are warning that jobs face getting bogged down from next month as stretched supply chains see stock held up at crowded ports.

Meanwhile others have repeated warnings that a no-deal Brexit will see some materials hit with double-digit import taxes.

Bathroom products are one area particularly at risk from large-scale price hikes, while the shock of no deal is set to delay the spending plans of private clients – already disrupted by the covid-19 pandemic – further into the new year.

Noble Francis, the Construction Products Association’s economics director, said that some areas of the market, such as housing and refurbishment, where activity is above pre-covid levels, have created demand for some imported materials that exceed supply.

He said: “Delays at ports due to covid-19 safety measures are currently exacerbating these issues.

“A no-deal situation would make these delays a major issue in January, but even with a deal with the EU the added bureaucracy due to additional certifications and more admin is likely to extend delays and raise costs for these products that are already in short supply.”

Last week, Turner & Townsend became one of the latest in a string of firms to warn that delays getting materials into the country from the EU will increase once the Brexit transition period comes to an end – with or without a trade deal.

In its latest UK market intelligence report, T&T said: “The ending of the transition period will see tariffs imposed on EU imports, pushing up costs. Increased friction at the UK border – with import shipments subject to customs checks and new paperwork – will also make delays more likely.”

The UK’s transition period from the EU formally ends on 31 December.