BUS 7055 Impact of Brexit

Running Head: BUS 7055
Impact of Brexit on the Construction Industry
Name of the Student
Name of the University

1BUS 7055
Introduction
Brexit refers to the exit of Britain from the European Union, a political and economic
union of various nations in the continent allowing various benefits to the members like free
labour, trade, movement and emigration and others. Currently, 28 countries of Europe are within
the European Union, which is set to decrease to 27 when Britain leaves in early 2020 (Moschieri
and Blake 2019). As per researchers and politics experts, Brexit will have long term implications
on various sectors in Britain like construction, business, sports, education and many others.
The purpose of this essay is to focus on the construction industry of Britain and analyse
the possible impact of Brexit on the construction industry of United Kingdom (UK).
Impact of Brexit on the Construction Industry
The impact of Brexit is said to affect all sectors in Britain that is not limited to
construction but also others like labour, export, import, education, sports and others. However,
for this essay, the focus is only on the construction industry of the kingdom. For construction,
experts and researchers believe Brexit will very badly impact the industry in various sub-sectors
like labour, property development, property purchase and others (Brooks et al. 2018). The most
significant impacts of Brexit on the construction industry of UK are discussed below.
Shortage of Labour – It has been estimated that once the Brexit occurs, there will be
massive shortage of labour in UK. This is because, of the total number of construction workers
currently employed in Britain, around 28% are from countries of European Union other than
Britain. Brexit will result in the restriction of free movement and employment for the labours and
thus, they will be forced to leave the country to look for jobs elsewhere within the European

2BUS 7055
Union (Malik et al. 2019). As a result, the British construction industries will take a massive hit
due to shortage of labour. As per the researchers, once Brexit happens and the labour shortage
occurs, Britain might opt to develop new immigration policy regarding hiring of labour from the
EU but that will be limited to workers of “high skill” and this will in turn completely shut down
the free labour movement of the country. Furthermore, due to shortage of labour, there will also
be shortage of skills in the industry that will in turn lead to the increase of costs of construction
projects as the labour demand will considerably increase than the ability of the construction firms
to supply labour.
Housing Crisis – It has been estimated that there will be significant housing crisis in the
country once the Brexit occurs as a significant amount of population originating from outside of
Britain will be forced to leave the kingdom. The British government has certain “housing
targets” for the house builders but it is now expected that post-Brexit, the house builders will not
be able to meet the housing targets that are currently levied on them. The main consequence of
this is the considerable increase in the cost of housing properties and also the projects involving
construction of housing properties (Mohamed, Pärn and Edwards 2017). While the Brexit will
result in decrease in foreign investment in the construction projects resulting in decrease in
property costs and increase in the number of original investment properties, it is also expected
that there will be strong uncertainty of economic stability in the country. As a result, loaning will
be much more harder as the Bank of England will not give out loans unless they are absolutely
sure about the repaying capacity of the loan applicant.
Costs of Materials – As stated earlier, in addition to restriction of free movement of
labour, the free movement of goods between EU and UK will also be shut down and hence, the
supply of materials in UK from other European countries will also be cut down by a significant