With the improved global economy, many countries are undertaking construction projects to build roads, bridges, housing and offices. Cranes are popping up everywhere. Over the past few years, overseas investors have been funding many projects in the UK. However, because of the fear of what will happen when Brexit takes effect on March 29, 2019, many construction projects have dropped off.
The UK is scheduled to leave the European Union on that date, but the details of the future relationship between the EU and the UK hasn’t been outlined yet. The trade arrangements the UK will deploy when Brexit takes places is challenging the country’s construction industry.
In 2017, Deloitte conducted the London Office Crane Survey which highlights the commercial property market in London. It showed that office construction is down 9% with the lowest volume of new office space started since 2014. “The survey found 25 new office developments in London started construction in the third quarter of 2017, adding 1.8 million square feet. That was the lowest amount of new office space started in more than three years.” This slowdown in new office starts shows that developers are being cautious.
Now throw in the US tariffs on steel and aluminum and the retaliatory tariffs from the EU and the whole construction industry is in a turmoil. The EU placed tariffs on many construction items from the US including iron, steel, windows, doors, stainless steel, tanks, vats, chain, screws and other hardware, appliances, kitchen items, sinks and glass. Most of these items are used in the construction industry, whether commercial or residential.
The double threat of tariffs and Brexit can raise prices, but also affect labor and supply shortages. Today unregulated movement of goods, services, money and people within the EU is allowed. Yet about 27 percent of construction workers in the UK come from outside the country. When Brexit takes place, the already short-labored UK construction market will have even less workers to fill construction jobs.
On the brink of Brexit, the construction industry in London has slowed, with a significant decline in housing, offices and retail projects. Yet there are some bright lights primarily due to the drop in the value of the pound since Brexit was voted in, allowing overseas investors and developers to benefit with more buying power.
London is also focusing on urban renewal with 10 massive projects with 7 to 10-year construction cycles. These include the building of the London headquarters of Apple, Inc. and the construction of a new US embassy.
Basically UK is in a waiting game to see what will happen when Brexit takes effect. Those in the heavy building materials and construction industries can utilize tools that keep costs down by automating processes, streamlining operations and improving communications and collaboration. Command Alkon is deployed by numerous firms across the EU and the UK, helping these businesses to gain a competitive edge by transforming their operations and improving efficiencies.