On June 23rd, the UK went to the polls and voted to leave the EU by 52% to 48%. It was a shock result for the UK Government, and now begins the process of leaving the EU and negotiating with the other EU nations to get the best possible deal for the UK. At the moment it’s very difficult to predict how the result will affect the economy, with some reporting that a recession is inevitable, with others feeling that it will put the UK in a stronger trading position. Whatever happens once we leave, what impact could this have on the trade industry?
Of course the major impact will be on the full range of EU regulations that tradespeople must comply with. Many of the regulations implemented by the EU were to ensure that health and safety standards were met and adhered to, which over the years has impacted on all aspects of the trade industry. The decision to leave the EU means the UK Government will now be responsible for deciding which regulations stay and which go, however the implementation of changes are likely to be over a long period.
Immigration was cited as a major factor in the UK’s decision to leave the EU. The free movement of people has always been a part of the EU deal, however in leaving this must be re-negotiated and is a hotly debated topic. Some have asked for a points based system, similarly to Australia, which could mean certain trade skills we’re missing could be awarded higher points than others. However this ignores the need for unskilled workers that are required in the trade, particularly within construction, and could further the skills shortage already felt within the industry, however many believe this will lead to increased investment in apprenticeships.
Impact on…business abroad
For those wanting to work or negotiate contracts in Europe this of course could potentially become more difficult as the removal of the free movement of people means as UK nationals we’re subject to the rules of other countries, and will have to negotiate whether we can enter to work or do business within their country. Trade skills always tend to be desirable to other countries, however we’re yet to see how the movement of UK nationals will be impacted.
Impact on…housing market
Of course most trades are affected if the investment in building new homes suddenly disappeared. Many felt that the housing market would be the first sign of consumer confidence, however with a deal still not being done, and no sign we’re leaving the EU at any point in the near future, the market is looking relatively stable and there has not been a significant reduction in the building of new housing. Generally, there seems to be a positive feeling in the construction industry as a whole.
Impact on…material costs
Membership of the EU allowed the free movement of goods as well as people, stopping the need for duties or other restrictions. Now we could see duties being opposed or limits to the amount of certain goods that can be traded, potentially leading to a shortage in supply. On the flip side you could argue that outside of the EU, we’ll be able to negotiate a better deal than we had before, however with a weaker pound this could prove to be potentially difficult.
We’re already seeing a number of our own customers facing increases in materials costs, either due to a weak pound or simply with suppliers taking advantage of the situation.
There are potential positives and negatives on the trade industry, and with Article 50 expected to be triggered in March 2017, it could be a long time before we see the full impact of the country’s decision to leave the EU.
By Richard Harris, director, Okappy