Report suggests no deal on Brexit could harm house building in UK

The potential impact of a no-deal Brexit on housing in the UK has been revealed in a new report which says that the number of new homes being built would fall due to a severe shortage of construction workers.

There could be up to 43,000 fewer construction jobs in the UK, including 5,000 in London, according to new research commissioned by the Mayor of London if no deal is reached by the time the UK leaves the European Union in 2019.

The findings are contained within analysis of the potential impact of five different Brexit scenarios on London and the whole of the UK commissioned from economic analysts, Cambridge Econometrics. The analysis also looks at the impact each Brexit scenario could have on nine key sectors of the economy.

The independent research shows that every Brexit outcome analysed would be bad for the British economy, but that the harder the Brexit, the more severe the economic damage could be. It reveals that with no access to the single market, customs union or transition arrangements, there could be 482,000 fewer jobs across the entire UK, together with £46.8 billion less investment.

Even if there is a softer Brexit with a two-year transitional deal and the UK remaining in the Single Market, there could be 18,000 fewer construction jobs, 2,000 of which would be in London.

It points out that a skilled migrant labour work force plays a huge role in building new homes, infrastructure and work space in the capital, with one in four workers in London coming from the EU.

Industry experts suggest that London needs an extra 13,000 construction workers every year until 2021 in order to plug the skills gap, highlighting the importance for the capital to be able to continue to attract the talent it needs post-Brexit. Any reduction in a sector that already faces a major shortage of skills would undoubtedly impact on developers’ capacity to meet housing targets both nationally and in the capital.

The UK construction sector also benefits from access to cash from the European Investment Bank and the European Investment Fund, and a loss of these investors could impact on big infrastructure projects like HS2 and Crossrail 2 and result in a loss of up to £754 million of investment in the sector by 2030.

Both the Mayor and Cambridge Econometrics are clear that this analysis is not a precise forecast of what will happen. There are a large number of factors that could impact on these scenarios, not least the details of any final deal with the EU or trade deals struck with any countries. The analysis does however highlight the scale of the comparative risks associated with each scenario and potential outcome from the negotiations.

‘This report lays bare the huge risks we would face as a result of Government’s failure to secure a Brexit deal that works for London and the rest of the UK. It shows the scale of the blow that a no-deal hard Brexit could have on our home building efforts,’ said James Murray, Deputy Mayor for housing and residential development.

‘London needs 13,000 additional construction workers to build the homes the capital needs so we simply cannot afford to lose skilled European labour that contributes so much to our great city. We are working hard to train up more Londoners to have the skills to work in construction, but everyone knows that will take time,’ he added.

According to Melanie Leech, chief executive of the British Property Federation, not knowing if there will be enough skilled workers to resource the construction industry over the coming years is deeply concerning. ‘We urge Government to provide clarity on the status of EU workers as soon as possible,’ she said.

‘We are already seeing this uncertainty undermine regeneration up and down the country. Government must get migration policy right if we wish to build much needed homes and the physical environments capable of driving innovation, which underpin a successful post-Brexit UK,’ she added.

It is the first time that the various impacts of Brexit on trade, investment and migration have been comprehensively assessed across a number of key indicators and sectors at sub-national level, according to Ben Gardiner, director of Cambridge Econometrics.

‘Our analysis is particularly valuable to local leaders because it indicates the potential impact on employment and output of Brexit under a range of scenarios, which is necessary given the uncertainty surrounding the final outcome of negotiations. Rigorous analysis and robust evidence such as this could also be usefully applied to other parts of the UK helping political and business leaders plan for the future,’ he pointed out.