The Blog

What Could an EU Exit Mean for the UK Construction Industry?

Even though the dust from the 2015 General Election has only just begun to settle, the political news agenda has already shifted to the next public poll; the European Union Referendum.

The EU referendum is one of those issues that seemingly everyone has an opinion on - even US President Barack Obama has weighed in on the debate to say that he opposes a UK exit. That's because an EU exit - for better or for worse - will have profound effects on the way business is done in Britain, especially in my own sector; construction.

Britain's continued involvement in a political and economic union of European states has been a subject of controversy stretching back as far as the 1970s. In 1975, a referendum was held asking whether or not Britons wanted to remain part of the European Economic Community, which became part of the EU - founded in 1993. The electorate resoundingly voted to stay.

That is not to say that history will repeat itself this time. The United Kingdom Independence Party (UKIP) - a party whose core belief is that Britain should leave the EU - have enjoyed a meteoric rise to prominence in recent years. Despite only winning a single seat in the General Election, their 12% share of the vote proved that their controversial brand of anti-EU politics has struck a chord with millions.

Additionally, the ruling party - the Conservatives - are facing serious infighting about the issue, which could well lead to resignations and defections to more right-wing parties like UKIP. So what if the UK does vote to go it alone? How would this affect the construction industry and the way we go about our day-to-day business?

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. This, of course, is nothing new. There's evidence to show that the architects of the Pyramids of Giza created incentives to entice labourers from all over Egypt to come and work for them. More recently, in the mid-20th Century, a British labour shortage - coupled with a financial crisis in Ireland - meant that the construction industry in the UK was primarily made up of Irish migrant workers.

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. James Hick, head of recruitment firm Manpower, says that an EU exit could lead to a skills crisis in any sector that relies on educated and/or skilled workers. I fear that Mr Hick is correct.

This is the view of many in the construction industry. Rob Hooker, director at Greendale Construction says that "foreign labour is vital to reduce skills shortages," and that UKIP's "little Englander" approach is short sighted; we are part of the global market, and to influence it we must remain in the EU. I can't help but agree.

Another issue is investment. At its core, the EU is a trading union, which breaks down the barriers that make it more difficult for companies in different countries to do business with, and invest in, one another. This has caused some alarm among multinationals with a foothold in the UK; already, European manufacturing giants Airbus have expressed concern about investing in an independent UK. Similarly, a high level employee of German firm Festo (which has an annual turnover of £1.76bn) has said German companies should hesitate to invest in Britain until the business landscape of a post-referendum UK becomes clear. And let's not forget that Germany is the economic powerhouse of the EU.

It's not just European countries voicing their opinion either. The BBC's business editor Kamal Ahmed recently wrote of a trip to Japan, where businessmen openly baulked at the prospect that the UK could possibly want to leave the biggest trading union on Earth.

Another factor that is important to keep in mind is that no country has ever withdrawn from the EU before; there is no precedent for how it could affect the way in which we do business with our contemporaries on the continent.

These examples indicate that, from a business point of view, an exit from the EU doesn't make an awful lot of sense. It allows other countries to provide ours with workforce and investment, and allows British businesses better opportunities to set up shop abroad. It seems to me that the strange identity crisis Britain has about itself in Europe is a prevailing factor in an anti-EU surge. Many Britons prefer to identify as British rather than European, and the concept of a union of European states dictating UK policy is a bitter pill to swallow for some. Make no mistake though; an EU exit on the back of a nationalistic, flag-waving, emotive campaign would have real, serious effects on British industry.

Back in 2011 George Osborne famously said "Britain is open for business." If he truly believes those words, now's the time for him to put his money where his mouth is and throw his support behind the campaign against an EU exit. The prosperity of the UK construction industry could depend on it.

Simon Thomas is the Managing Director of Asset International, a leading manufacturer of large diameter plastic pipes. Asset International Ltd supplies bespoke designs to the water and construction industries, from surface drainage to foul sewers and inter-process pipework:

Popular in the Community