Any assessment of the impact of Brexit requires a degree of
crystal ball gazing: its impact is very uncertain and will remain
so for years. Brexit's effect on the construction industry (as
with the wider economy) will depend, amongst other things, on
whether the UK retains access to the single market, the nature of
any new trade deals negotiated, immigration policies, interest
rates, government borrowing costs and sterling's volatility. In
spite of (and because of) these uncertainties, we have highlighted
some key considerations for the construction industry.
Critics of the EU often cite its red tape as an inhibitor of
business. EU procurement law is particularly criticised for its
cumbersome lack of flexibility, which requires contracts to be
subjected to a competitive tender process, even when an awarding
body has legitimate reasons for wanting to work with a particular
Whether the UK could do away with EU procurement law will of
course depend upon the precise terms of its withdrawal. However,
anyone hoping to see the abolition of procurement regulation is
likely to be disappointed. Even if the terms of the UK's exit
allow it to abandon EU law, it is a member of the World Trade
Organisation and a signatory to the Government Procurement
Agreement, whose rules broadly require transparency and the ability
for procurement decisions to be impartially reviewed. In addition
to this, the UK is leading the way in anti-corruption initiatives,
including the use of Open Data Contracting Standards, in which all
tender documents are made publicly available for the duration of a
project's life. It is therefore highly unlikely that leaving
the EU will see the end of public procurement law, though there may
be some streamlining of the process.
Projects which have already been procured are likely to have
been tendered on the assumption that there would be no tariffs
imposed on the import of materials from the EU. Should this change,
it could add significant cost to a project; however, as it will
take a minimum of two years to leave the EU, this could only affect
longer-term projects. It is also worth noting that sterling's
volatility could adversely affect the cost of materials.
For these reasons, businesses should be mindful of potential
tariffs and currency when procuring and tendering projects and when
drafting associated documentation.
Change of law clauses
In publically procured contracts, it is typical for the
government entity to bear some responsibility for changes in law
that affect the contract, save to the extent that they are
"general" changes affecting business generally in the
Although Brexit is likely to impact the whole nation equally,
businesses should consider protecting their position by advocating
that responsibility for any changes in law occasioned by Brexit is
borne by the government entity. Whilst it may be difficult to
achieve this for all changes resulting from Brexit, it should be
possible to identify particularly important laws/ regulations that
would have a material impact on the contract or the parties.
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.
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