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Brexit and the construction industry- what will 2019 hold?

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We’re running a short blog series on the legal changes and events that we expect to see in the construction industry over the course of 2019. To kick off the series, we take a look at two factors – Brexit and insolvencies - that we anticipate will have a negative impact on the industry, as well as one that we think will be a positive for the world of construction this year…

Construction industry skill shortage to continue as Brexit approaches

Whether the UK is headed for a deal or no deal situation with Brexit, the skills shortage within the construction industry look set to continue. It can’t be wholly blamed on Brexit, as the skills gap has been apparent for years, with the Federation of Master Builders reporting that skills shortages in Q3 of 2018 matched their peak reached in Q4 of 2017, with 68% of firms struggling to hire bricklayers. Brexit could, of course, worsen this problem, by either completely removing access to skilled European migrants, or at least, resulting in a period during which they are unable to work.

We are told by our clients that they have serious concerns that the workforce is retiring, and they are not being replaced.

Woes for the construction industry

The construction industry has always been susceptible to insolvency. However, 2018 saw an increase in the number of construction insolvencies, continuing a trend that has been steadily rising for the last few years. As happened with Carillion, there is often a destructive knock-on effect throughout the supply chain when a contractor, especially a big one, goes under.

Modular construction to continue increasing

Modular construction looks set to continue at speed, as factories open across the UK and the government has announced a £1.2bn modular framework alliance contract. Bids closed in December and a contract start date is set for early March. Modular construction, with its speed and flexibility, could prove to be positive for the industry, although good risk management remains essential, as manufacturing mistakes, which would likely be reproduced many times across a site, could prove expensive.

If you would like more information, please contact our Construction Team.

Disclaimer: Anything posted on this blog is for general information only and is not intended to provide legal advice on any general or specific matter. Please refer to our terms and conditions for further information. Please contact the author of the blog if you would like to discuss the issues raised.