Hard Brexit could cost 43,000 construction jobs

Grant Prior 1 week ago
Share

A ‘no deal’ hard Brexit could lead to 43,000 fewer construction jobs.

The warning was issued in new independent economic analysis commissioned by the Mayor of London, Sadiq Khan.

Experts from Cambridge Econometrics considered five scenarios of how the UK’s future relationship will look.

But even a softer Brexit and remaining in the Single Market but leaving the Customs Union could cost thousands of jobs.

Khan said: “I’ve released these impact assessments because the British people and our businesses have a right to know the likely impact on their lives and personal finances.

“This new analysis shows why the Government should now change its approach and negotiate a deal that enables us to remain in both the Single Market and the Customs Union.”

Impact on UK Construction

One of the major issues facing the construction sector is the shortage of skills. The sector currently relies heavily on a foreign migrant labour force. Almost 13% of construction workers across the UK were born abroad, and in London and the South East, this proportion increases to 50%. In particular, 25% of employees in the sector in London were born in the EEA

Once the UK leaves the Single Market, it is likely that the skills shortage could get worse, if the new agreements don’t allow for free movement of people. This could result in even higher pressures on wages, as labour supply contracts, causing construction firms to face considerably higher project costs. Additionally, this could reduce firms’ capacity to deliver new houses to meet the government’s housing targets, and further deepen the housing crisis, especially in London.

The labour market issues the construction sector faces are reflected as an expected fall in productivity in the macro modelling assumptions. Once the UK leaves the Single Market, the construction sector is also likely to be affected by trade impacts.

A 2010 study by the Department for Business Skills and Innovation highlights how reliant the UK construction sector is on the rest of the EU, estimating that 64% of building materials were imported from the EU, and 63% were exported to the EU. If the UK faces a reduction in access to the EU market following Brexit, construction firms could experience an increase in their costs or a shortage of building materials, as they face an increase in tariffs or limits on quantities imported, which is reflected in the trade assumptions applied to this sector.

At the moment, the UK construction sector benefits from having access to the European Investment Bank (EIB) and the European Investment Fund (EIF), which have invested €7.8 billion in major infrastructure projects, and lent €666 million to SMEs in 2015. A loss of these financial aids could significantly impact the ability of firms to deliver big infrastructure projects such as High Speed 2 and reduce development opportunities for start ups.

Additionally, foreign investment could dampen due to uncertainty over the UK economy following Brexit, and as investors delay making decisions on the future of projects. This loss of potential future investment has been reflected as a fall of up to €852m in investment in the sector by 2030, depending on the scenario and the severity of Brexit.

Latest news

Network Rail to pay Carillion workers for next three months

Suppliers will also be paid for work carried out post-insolvency
21 hours ago

Carillion bankers set up £225m fund to help subcontractors

Task force launched to help stricken supply chain
2 days ago

HS2 reveals 3.4km Colne Valley viaduct design

New sleek-look railway viaduct will be one of the longest in the country
1 day ago

Barratt to build 2,700 homes in Swindon

House builder will invest over £180m in infrastructure and housing
1 day ago

Balfour Beatty in talks to head off more Crossrail strikes

Unite union announces plans for four more days of industrial action
1 day ago

Survey drone hits crane on construction site

Air accident investigators called in after drone strike
1 day ago

CITB calls on contractors to save Carillion apprentices

Skills body could be £3.8m better off following collapse
2 days ago

Betting Spy: West Ham and Leicester at the double

Hammers can beat Bournemouth despite yet another injury to Andy Carroll
2 days ago

Opinion: Carillion legacy must be pay and procurement reform

Carillion car-crash must finally jolt industry and government into action
2 days ago

Boost your online presence with the new Enquirer Directory

New site for suppliers and buyers will showcase their products, services and latest stories
3 months ago

Barratt London shelves 27-storey Aldgate tower project

Barratt abandons Phase 2 of city fringe tower scheme
3 days ago

Banks pledge not to pull plug on Carillion subcontractors

High street lenders promise raft of measure to help small businesses
3 days ago

NAO challenges value of PFI contracts

Little evidence PFI offers more construction cost certainty or operating efficiency, says watchdog
2 days ago

Skanska UK on alert as group plans 3,000 job cuts

Skanska Group says UK business focus to switch to core markets
3 days ago

Sheffield United submits plan for South Stand

Championship club plans landmark stand raising capacity to 38,000 seats
2 days ago

Kier fined £100,000 for hospital oil spill

Leak at Dorset hospital site lands contractor in court
2 days ago

Carillion sites still on hold as hopes rise for services deals

Insolvency Service update gives hope to suppliers
3 days ago

Subcontractors left stranded by Carillion “early payment” system

Millions sitting in controversial system may never reach suppliers
3 days ago

Crunch day for over 8,000 Carillion staff

Carillion went bust with just £29m left and would have been out of cash today
3 days ago

Balfour tipped for Carillion’s Leeds ring road job

£115m East Leeds Orbital Route contract consolation for Balfour after £45m hit
3 days ago

Colmore Tang offers early payment to Carillion subbies

Birmingham contractor to speed-up payments to its suppliers hit by Carillion collapse
4 days ago

Lendlease launches £1.5bn build-to-rent partnership

First £450m tranche invested in private rental build at Elephant & Castle
3 days ago

Government fast-tracks probe into Carillion directors

Business secretary extends investigation into actions of directors and auditors
4 days ago

Race starts for £8.7bn Highways England framework

New approach will allow smaller contractors to take part in regional roads delivery
4 days ago

Supply chain owed £2bn by Carillion

Subcontractors hoping for protection from Project Bank Accounts
4 days ago

Carillion fall-out hits Van Elle and Speedy

Specialist subcontractors start to disclose cost of collapse
4 days ago

Winvic lands Sheffield build-to-rent deal

Construction to start this month on nine-storey block
4 days ago

Willmott Dixon wins second Kent Uni project

Firm to start £13m contract for School of Economic building
4 days ago

Carillion collapse to cost Balfour Beatty £45m

Galliford Try also hit for up to £40m on Aberdeen Western Peripheral Route
5 days ago

Carillion staff and suppliers told to carry on working

Liquidator sets up website offering advice to anyone hit by the collapse
5 days ago

Contractor services