September 27, 2021

UK construction sector responds with cautious optimism to post-Brexit deal

The UK construction industry has reacted with both with relief and a fair amount of caution as news of the British government’s proposed Brexit deal with the EU continues to filter through.

The UK and the European Union have agreed a wide-ranging free trade agreement, avoiding the risks associated with a no-deal and delivering continuity in cost and availability of construction products and materials.

The deal will mean widespread market access with no tariffs, quotas or customs duties now or in the future and will provide the construction industry with much needed reassurance in respect of the cost and availability of products and materials in a time of high uncertainty.

The agreement sees a continuation of the rules of origin, based on EU precedent, as well bilateral recognition concerning assembly which means that UK inputs and processing into EU products and materials will be recognised by the EU and vice versa in the UK. This will encourage trade and ensure that where product supply chains are long and complex, trade will not become overly burdensome or costly through technical and regulatory barriers.

The UK and EU have committed to minimising technical barriers to trade, with agreement on regulatory co-operation although were not able to agree mutual recognition of conformity assessments which means UK bodies will not be able to certify products to EU standards and vice versa.

The two have also agreed trusted trader schemes and co-operation in customs at the border, to explore exchange of import and export information and aide ‘roll-on roll-off’ flow at ports – reducing administrative burdens on business and possible delays. Mutual agreement was also made in the collection of VAT and debt recovery, building on existing international agreements while recognising the UK as a tax-sovereign nation, able to set and control its own tax regime.

Progress has also been made in respect of migrant workers with the UK and EU agreeing a framework for mutual recognition of professional standards and qualifications.

Commenting, James Butcher, Head of Policy at the National Federation of Builders and Chair of the Construction Leadership Council’s BREXIT working Group said: “The UK and EU’s announcement of a trade deal will come as welcome relief, not just to the construction industry but to the global economy. The agreements reached will enable construction companies to continue to reliably forecast the cost and availability of products and materials imported from the EU or comprising components made in the EU. The mutual co-operation in respect of reducing technical trade barriers and co-operation at the border will also undoubtedly help to avoid some of the risks of delay and disruption. What this means is that in January we will not see the inflationary shock of tariff and quota introductions or the expected currency depreciation associated with a no-deal.  This deal delivers certainty at a time when it is needed most and represents a good day for British construction.”

Construction businesses should still ensure they are ready for the end of the transition period, as the UK is still due to leave the Customs Union and is implementing its own Points-Based Immigration System, bringing to an end the freedom of movement.

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After years of uncertainty, the announcement today of a UK-EU trade deal brings reassurance to the construction industry, but Britain’s small builders are already suffering the impacts of the delay, according to the Federation of Master Builders (FMB).

Brian Berry, Chief Executive of the FMB, said: “After the toughest of years, Britain’s builders will welcome the certainty that this deal appears to offer. Unfortunately, however, the deal will have come too late for many already feeling the effects of prolonged indecision.”

“Nine in ten builders already face risings costs due to supply chain disruptions and higher product demand. We will wait to digest the detail, but this trade deal must deliver for builders by removing the barriers in their path to building back better and greener, be those access to products or skilled labour.”

The Builders Merchants Federation, meanwhile, has welcomed the announcement that the UK and the EU have agreed a free trade agreement achieving widespread market access with no tariffs or quotas.  This will provide the construction sector with much needed reassurance in respect of the cost and availability of building products and materials.

BMF CEO, John Newcomb, who also co-chairs the Construction Leadership Council’s Movement of Goods and Materials working group said: “While we still have to study the detail, the conclusion of a trade deal should avoid unnecessary tariffs on building products and materials moving between the EU and the UK and the price rises that would inevitably follow. This has always been our favoured outcome.  Every day of uncertainty made it harder for our members to plan and those who trade with the EU will be relieved that they will not have to deal with a host of additional procedures as well as additional costs.

“Builders and other local tradespeople continued to work to improve people’s home throughout the pandemic and are set to play a key role in the UK’s post-Covid economic recovery.  We now have the assurance of the continued free flow of materials needed to fulfil the Government’s promise to build back better, improve the energy efficiency of our homes and create the many thousands of jobs required to do so.

“However, we remain concerned over the capacity problems at UK container ports, which in recent weeks have demonstrated how quickly shortages and consequential price increases can occur.  We are continuing to press for action to resolve these issues as soon as possible, so the construction industry’s new year return to work is not slowed by the lack of key products.”