How will Brexit affect the construction industry? Two views:

The opening shots have been fired. Brexit is the big political issue of the year, and perhaps the decade. For those of us here in the present, it is going to be a busy few weeks in the run up to the EU referendum. Party loyalties will be tested to the limits. Industries will hold views. Businesses within those industries will hold competing views. Individuals within those businesses, within those industries will hold their own views, all often contrasting. Arguments based on reason, on attachment to tradition, on patriotic necessity, on economic planning, on their children’s future, and every other factor that influences us will compete for our opinions. www.nstraining.co.uk investigate.

As with every other industry, the construction industry has a variety of views on the prospect of Brexit, and I think it necessary for us to have views at our disposal before making our own decision. Here are thoughts from both the ‘in’ and ‘out’ EU camps:

In:

A survey by Smith & Williamson recently found that only 15% of construction executives favoured a UK exit from the European Union. A massive vote of confidence in favour of remaining part of the EU. The chairman of the property and construction group at Smith & Williamson, Mark Webb echoed the thoughts of quite a few commentators from the construction sector, when noting the reasons for favouring the UK remaining within the EU:

when considering that the key components of the sector are also cornerstones of the EU, access to labour and flexible working, it is less shocking. The survey highlights the concern within the industry that should a Brexit happen there is a very high likelihood of access to labour declining as margins are squeezed.

– Access to labour is essential for the construction industry, the worry of a Brexit from the EU seems to be rooted in access to labour. Renegotiated treaties following such a decision, may well take years, may well require drawn out negotiations, and may result in much less ease of access to labour. Simon Thomas, Managing Director of Asset International, writing for Huffington Post similarly focused on the necessity of labour to fill the skills gap in construction in the UK:

The first major issue is access to labour, without which the construction industry would be unable to function. The industry relies heavily on foreign workers to fill both skilled and non-skilled job roles, and always has done.”

A core principle of the EU is the right of free movement, which makes immigration between member states relatively easy and stress-free. For the construction industry, this provides a vital resource. An EU exit would mean that foreign workers would find emigration to the UK much more difficult. It’s logical that in this scenario those skilled individuals will instead take the easy option and cast an eye toward France, Germany, or Spain, where the right of free movement would remain intact.

– As a key resource, ease of movement for labour – a fundamental value of the European Union, unlikely to be curbed – the construction industry is unlikely to back a British exit from the European Union. As it stands, the construction sector is set to bounce back from a slow few quarters, and so demand for labour is likely to grow, which means either free movement from EU members is going to be a greater necessity, or the UK is going to have to invest in training (hi, we’re North South Training!) up a huge number of British workers to fill the gap.

Out:

Clearly the consensus from the construction industry is that the UK should remain within the EU. But dissenting voices are vital to any consensus. It challenges our assumptions, it engages on a deeper level, and it strengthens or weakens positions, until we come to a better understanding of the issue. When I see a figure of 85% in support of a position, I want to know the arguments against, because strength in numbers is not automatically an indication of truth.

Lord Bamford, the Chairman of JCB is a dissenting voice. He is convinced that a Brexit could cut the costs of bureaucracy so much so that any additional costs of leaving the EU would be easily covered. Bamford also rubbishes the ‘scare mongering’ of those who insist it would make trade far more difficult with other European nations, because he insists it is in everyone’s interests to trade openly and freely:

I think it would be, because I really don’t think it would make a blind bit of difference to trade with Europe. There has been far too much scaremongering about things like jobs. I don’t think it’s in anyone’s interest to stop trade. I don’t think we or Brussels will put up trade barriers.

– Further, he claims the red tape imposed by Europe can often make it easier to trade with those outside the EU:

It’s a burden on our business and it’s easier selling to North America than to Europe sometimes.

– Lord Bamford’s belief that similar trade deals with the EU in the event of a British exit will likely remain similar for the sake of the interests, seems to be echoed by Parliament’s own recent briefing:

If the UK wished to remain in the single market but outside the European Economic Area (EEA), like Switzerland, it would probably have to accept certain EU rules by arrangement. Whether these would include the free movement of people would depend on the outcome of UK-EU negotiations.

Most studies on the impact of migration on the UK economy have found weak or ambiguous effects on economic output, employment and wages on average

On the other hand, if the UK were to negotiate a relationship with the EU similar to the EEA states or Switzerland, it might find that it did not have any greater scope to control EU immigration to the UK than it did as an EU Member State.

You are going to hear a lot of contradictory arguments across industries, across unions, and across businesses on the benefits of staying or leaving the European Union. When an opinion appears strong, a contrary view will break it down, and vice versa. Ultimately it is up to us as individuals to weigh the arguments, and come to a rounded decision. On a personal level, I am in the 1/3 of voters who have not made a decision, and remain open to persuasion from either side. One thing is for sure, it’s going to be a spectacularly complex, information packed few months until the referendum arrives.

Written by Jamie Smith, Marketing Manager at www.nstraining.co.uk

 

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