"Building after Brexit" - the impact of the deal on the construction sector

It is widely considered that the Brexit deal is preferable to what would have arisen in a no-deal Brexit, and the deal has been cautiously welcomed by many in the construction industry for providing some much sought-after clarity. Whilst the impacts of Covid are ongoing and are likely to be lasting, the industry is likely to see some notable changes over the coming weeks and months as a result of Brexit.

It is acknowledged that the construction industry relies relatively heavily on foreign labour and one impact of the Brexit deal is that a new points-based immigration system will result in workers from outside of the UK being required to cross additional hurdles before being permitted to live and work in the UK. This may see the impact of the skills and labour force shortage worsening further. Consequently, the UK may be confronted with higher project costs, as the demand for labour exceeds supply.

In addition to the free movement of people, membership of the EU allowed for the free movement of goods within the EU, eliminating duties and other restrictions. In December 2020, the UK saw how quickly problems can develop at the borders when there are issues, thereby reinforcing the importance of free trade agreements. Whilst the Brexit deal means that no tariffs or quotas will be introduced on goods at present, the deal does not completely eliminate the possibility of such in the future. Further, those in the industry will be well aware now that there are more administrative requirements and more paperwork and checks are needed at the borders, and this, already, is reported to be causing some problems and delays for those hauliers arriving unprepared.

The broader socio-economic impacts on market conditions are likely to be impacted by Brexit, and of course, Covid. Housing and commercial property, particularly office space, demand is likely to change, with consequential effects on infrastructure requirements and the construction resources needed to deliver forthcoming projects. That being said, there is an evident surge in the influx of demand in new homes, and the use of modern methods of construction (MMC) is being encouraged to increase efficiency and productivity, improve quality and reduce waste. MMC promotes the use of off-site planning, design and assembly of products at a location away from the final site, together with onsite systems, which tend to benefit from modern processes which promote both speed and quality.

Looking forwards, many advances have been made in modern construction techniques, some of which are in use at present, but others which are in the pipeline, as the industry begins to shift towards more sustainable and environmentally friendly construction methods.

The industry has shown resilience and the ability to quickly make innovative adaptions since March 2020, so it is anticipated that such willingness to overcome challenges will be able to be taken forward to deal with the issues the pandemic continues to bring, and the inevitable changes that Brexit will bring.

2021 is anticipated to be another testing year for the construction sector in the UK, so if you require any assistance with the production or negotiation of contracts, subcontracts or any ancillary agreements in light of Brexit and Covid developments, or more generally, contact John Pickervance, specialist Construction lawyer and Head of Commercial.