A vote in the UK’s Parliament over the Prime Minister’s Brexit deal has led to “further uncertainty” for the construction industry, and fears that the Pound will decline further.
Prime Minister Theresa May’s proposed deal for Brexit (the UK’s decision to leave the EU) was decisively defeated in the House of Commons last night (Tuesday).
It is being reported that business leaders, including Balfour Beatty chief executive Leo Quinn, raised their concerns with cabinet members over the possibility of a no-deal Brexit.
Sky News reported that Quinn told Chancellor of the Exchequer Philip Hammond that decisions were being delayed on the HS2 high-speed rail line, new nuclear projects, and the expansion of London’s Heathrow airport.
He is reported to have said, “The enemy of business is delay and procrastination, and the construction industry will face large-scale restructuring where it cannot carry the resources it will need over the next 25 years, and capability will have to be let go.
“Once resources are lost to industry it is very difficult to get them to come back; the next six months are critical.”
At the UK’s Construction Equipment Association (CEA), chief executive Rob Oliver said, “Whichever side of the Brexit debate you were on back in 2016, the consistent business voice since then has been to seek some certainty as to what the ‘new rules of the game’ will be in the future.
“Following yesterday’s vote in the House of Commons, it would seem we are no further forward in reaching this goal.”
He said the CEA had been strongly focused on looking at the regulatory implications of a “no-deal” and the “deal” option supported by the government.
“While the prospect of the latter reaching the statute book has receded, the financial markets may have already given some sign that they believe the no-deal outcome is also less likely. Other pundits feel a no-deal is now more likely.
“Without rehearsing the various political permutations, it feels that we are still a long way off a solution. Remember too that the initial purpose of the bill presented to the Commons was essentially to secure terms for a transition period, while the transition to what question has been largely fudged.”
Mark Robinson, CEO of public-sector organisation Scape Group, said the outcome of the vote plunged the country and the industry into further uncertainty.
“While there are fundamental issues in Theresa May’s deal, this decision by MPs will prolong the economic impact on businesses and local communities up and down the UK.”
He said one of the biggest concerns for construction bosses would be a further decline in the pound, leading to increased pressure on material prices.
“The construction materials price index increased 5.3% on the year in January – a significant jump which has seen the cost of net imports from the EU rise to the highest level since 2011. Combined with the ever-widening skills gap, many will be wondering how they are expected to deliver projects at the necessary rate.”
Robinson said that this toxic mix, with the added Brexit fear factor, had the potential to paralyse construction growth.
“While it is now less likely than ever that we will have our ducks in a row prior to our exit from the EU, the industry needs clarity on our access to essential construction talent from the EU, to ensure we have the manpower to deliver.”
Following the vote in the House of Commons, leader of the opposition Jeremy Corbyn filed a motion of no confidence in the government, which could lead to a General Election.
Robinson said, “Despite the challenging environment we still need to build, a General Election will be disastrous for the country.
“Right now, we need a government that can reassure the industry that it is business as usual and we cannot be side-lined. It is local businesses, the market and economy that bears the brunt of continued delays.”