The result is in, but what will be the long-term effect for construction?
This morning the country woke up to the news that many people still believed improbable even 48 hours ago, despite the hair’s breadth between leave and remain in the polls of recent days. The UK’s vote for a Brexit has already claimed the scalp of the prime minister and caused the stock market to fall by 8% on opening. From a construction perspective, the initial impact has been to send developers’ and housebuilders’ shares tumbling – but is this a knee-jerk reaction to sudden economic uncertainty or a sign of things to come?
Building, along with two-thirds of the construction sector, backed the Remain campaign on the basis that, to us, to stay in the union appeared to offer the best outcome for the sector as a whole in terms of economic certainty, foreign investment and freedom of labour. Along with many other businesses that wanted to Remain, the construction firms supporting continued union often had caveats and concerns over their pro-EU stance, but on balance, for a sector still recovering from recession, the economic unknowns of leaving appeared, for a significant proportion of the sector, too great a risk.
The reality is that despite this morning’s market falls, the industry will not be able to judge the impact of Brexit on the ground for some time
The reality is that despite this morning’s market falls, the industry will not be able to judge the impact of Brexit on the ground for some time. The latest economic figures on construction output notably still have not reflected the hiatus that we know there has been in commercial development projects coming on-stream, given the lag between the front end of the development industry and the rest of the sector. So even the short-term impact of this week’s vote will take months to show through.
So, what businesses will need to do over the coming days, amid the rush to understand the longer term implications of the vote, is at least push for visibility on those projects that have been on the go slow.
The wider economic picture will not emerge for months and not fully for years, but whatever the ultimate impact – good or bad – the UK and its new prime minister will still need delivery of vast amounts of housing, infrastructure and commercial work over the decades to come.
The industry will deliver those in the latest political environment, just as it has always done. But the complex questions over the funding and labour, that it will require to do so, are only just beginning.
Sarah Richardson, editor