UK: Brexit means...?

Amidst a spectrum of bold political promises, rhetoric and catchphrases, we now know exactly what Brexit means. The recent addition of "Brexit" to the Oxford English Dictionary is very simply defined as: "The withdrawal of the United Kingdom from the European Union". Yet, aside from its honorary inclusion into the English language, as Edward Colclough explains, much still remains uncertain about Brexit and its implications for the UK construction industry.

Following the UK's vote to leave the EU on 23 June 2016, by a slim majority of 51.9% to 48.1%, in March this year the UK Government formally triggered Article 50. In doing so, it commenced a two-year negotiation period to implement what is meant by Brexit. With the pressure of a two-year deadline to negotiate a divorce settlement with the EU under way, this June saw a Brexit-induced snap general election. The outcome, a result the pollsters miscalculated almost as much as the Brexit vote just 12 months before, a hung parliament. With no political party able to secure a clear majority to govern, the UK Government's hand at the Brussels' negotiation table has been weakened and further uncertainty cast on what Brexit will ultimately mean for the UK.

Responding in a keynote speech in Florence this September, the Prime Minister, Theresa May, put forward a proposal to postpone a full Brexit until 2021 by asking the EU member states to agree to an additional two-year transition period. During such a transition period the UK will have left the EU, but only in name. All UK payments into the EU budget, the free movement of people and the jurisdiction of the European Court of Justice would continue whilst more time is given to implement a Brexit deal. What is clear is that any certainty over Brexit will not be known in the immediate future. In the words of the "European Council (Art. 50) guidelines for Brexit negotiations", "nothing is agreed until everything is agreed".

When uncertainty is the only certainty

With UK PLC now calling for confidence to be instilled into a turbulent and uncertain market, attempts to predict the true impact of Brexit on the UK construction industry remain the subject of speculation and crystal ball gazing. This is unfortunate as the construction industry builds on certainty and market confidence.

Although little has changed in terms of day-to-day policy since the Referendum vote (with some still seeking to prevent a Brexit from happening at all), the political uncertainty of Brexit is very much taking its toll. Following a positive start in Q1 of 2017 there has been a deceleration in growth since June's election, with private, commercial and industrial sectors seeing the most significant reduction in output.

The UK property market, a traditional prop to the construction industry, has itself been a casualty of the Brexit vote, with developers now tempering construction plans and taking longer to commit to new projects in order to reduce their market exposure and mitigate widespread concerns that companies may rent less space or simply relocate from the UK altogether. Doubts are also surfacing over the Government's commitment to building one million new homes this Parliament due to Brexit uncertainty, a jittery home buyers' market together with stamp duty and pending interest rate hikes. On the back of a weakened pound, funders are also tightening their lending criteria making it more difficult to secure finance for new projects. With the construction sector now seen to be flirting with a recession, in the eye of this perfect storm is the political uncertainty surrounding Brexit. The Business, Energy and Industrial Strategy Committee provided some comfort to business in its recently launched inquiry into the implications of Brexit, which seeks to establish how the interests of different sectors should best be pursued in both the negotiating process and post-Brexit. In doing so, the Committee will examine a range of key issues relating to market access, non-tariff barriers, regulation, skills, R&D, trade opportunities and transitional arrangements. The major concern for construction is that it did not even make the cut of sectors within the remit of the inquiry – with only the nuclear, automotive, processed food and drink, aerospace and pharmaceuticals sectors on the Committee's agenda. It is increasingly clear that the construction industry will have to take the initiative itself to get its points of view across and onto the Brexit agenda.

For an industry that has been reliant on the EU for investment, labour and materials, the following section identifies some key areas of uncertainty to be addressed in the Brexit negotiations:


Free movement of labour has been one of the most valuable assets of EU membership for the UK construction industry. So much so that the use of EU labour has managed to paper over the cracks of a sustained lack of skilled UK labour, an ageing workforce and a failure to invest in training and development to encourage the best home-grown talent into construction. This is perhaps the biggest obstacle Brexit creates for the industry.

RICS has already identified the UK's skill shortage as the primary risk to jeopardising a predicted £500 billion pipeline of projects, on the basis that there are not enough British workers to meet even the current demands of the industry. With 194,000 EU workers currently working in the UK construction sector we are utilising an EU workforce large enough to deliver 16 Crossrail projects. It is further expected that 430,000 domestic workers will have retired between 2010 and 2020, meaning the industry will need to find the next generation of workers to plug this gap. Until a solution is found to enable workforce supply to meet the demand of the construction sector, labour costs will continue to increase and impact on the competitiveness of projects.


Following the pound's depreciation since the EU Referendum, one of the strongest cost pressures on the construction industry has been the rising prices of imported materials. With 64% of construction materials used in the UK being imported from the EU, any loss of tariff-free access to the single market will only increase the cost of resources and the profitability of projects until adequate trade agreements are negotiated and put in place. In contrast 63% of construction materials exported from the UK go to the EU and have the potential to be exposed to heavy duties. Comfort needs to be provided in relation to the accessibility and affordability of construction materials in a post-Brexit construction industry, as this is a substantial pricing risk that investors, employers and contractors will all look to avoid.

EU procurement/red tape

A common criticism of the EU from the construction sector was the perception of extensive red tape and convoluted procurement regulations which resulted in inefficiencies due to the cost of bureaucracy. While Brexit may appear to offer the opportunity to streamline the existing EU requirements with a more flexible approach, the Government's White Paper, The Great Repeal Bill, seems to suggest it will be business as usual on this front. The White Paper indicates that the Government will seek to convert directly applicable EU law into UK law. In the long term the extent to which the current law is rewritten is likely to depend on the nature of the Brexit deal the UK gets.


The UK has been one of the biggest net beneficiaries of EU funding from the likes of the European Structural Investment Fund and the European Regional Development Fund. While leaving the EU will close the door on such investments pools, which have supported projects such as Crossrail and HS2, it opens up the potential for foreign investment opportunities. Investors will be paying careful attention to the health of the UK construction industry over the coming months, meaning the sector must be able to sell itself as a collaborative and successful investment choice. While foreign investors will be cautious of the uncertainty surrounding Brexit, the weak pound has been able to maintain the UK as an attractive investment opportunity. It is essential that the Government, and the sector itself, is able to maintain the UK construction sector as a good investment opportunity on a global stage.

Brexit-proof contracts

A key purpose of construction and engineering contracts is to allocate risk between the parties throughout the duration of a project. While contracts have inbuilt mechanisms for addressing changes in law, taxes, labour supply, the costs and/ or availability of materials and acts of force majeure, the problem with Brexit is that it stacks so much uncertainty against these items. The major concern is that these are all risks which are becoming increasingly difficult for parties to predict, manage or price against. In a culture of fixed price lump sum contracts, where these risks are typically thrown down to the contractor, this approach will most likely have to change.

What happens next?

By general consensus the construction sector favoured the "remain" vote. Brexit, however, as defined by the Oxford English Dictionary, is not in itself a bad thing for the industry. Whether Brexit proves to be good or bad for the construction industry will be dictated by the terms of any Brexit deal and the construction industry's ability to capitalise and adapt to the changes it faces. Although uncertainty has the potential to hinder the industry in the short term, the construction sector has a golden opportunity to market itself post-Brexit to a global audience. In doing so it must set out in no uncertain terms what it requires a prosperous post-Brexit construction sector to look like. Once it has done this, it will then be over to the Brexit negotiators to deliver.

This article is taken from Fenwick Elliott's 2017/2018 Annual Review. To read further articles go to Fenwick Elliott Annual Review 2017/2018.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Gowling WLG
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Gowling WLG
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions