Brexit Institute News

Post-Brexit: the Future UK-EU Construction Industry Relationship

Jennifer Charlson (University of Wolverhampton)

The construction sector’s importance to the UK’s economy is explained. The UK-EU Political Declaration incorporates clauses relevant to the construction industry which are explored in this article. However, if no UK-EU agreement is reached by 31 December 2020, the UK will trade with the EU on World Trade Organisation rules.

The construction industry makes a significant contribution to the UK’s economy. The Engineering UK 2018 Report ‘The state of engineering’ details that “construction had a turnover in 2016 of £171.91 billion, representing 14.0% of the total turnover produced within the engineering sectorial footprint.” The 2019 House of Commons Briefing Paper ‘Construction industry: statistics and policy’ reports that “In 2018, the construction sector contributed £117 billion to the UK economy, 6 % of the total” and “There are 2.4 million construction industry jobs in the UK in Q 2 2019, 6.6% of all jobs.”

The Political Declaration, dated 19 October 2019, sets out the agreed framework for the future relationship between the UK and the EU and reflects the government’s ambition to conclude a broad, deep and flexible partnership across trade and economic co-operation with the EU, with a free trade agreement with the EU at its core. The Political Declaration includes the following provisions which are applicable to the construction of the built environment:

• A determination to safeguard high standards of workers’ rights and environmental protection (paragraph 2)
• The ending of free movement of people between the EU and the UK (paragraph 4)
• Recognition of complex and integrated supply chains (paragraph 16)
• Noting of the UK’s intention to accede to the World Trade Organization (WTO) government procurement agreement (GPA) (paragraph 46)
• The parties’ commitment to standards based on those of the GPA ensuring transparency of market opportunities, public procurement rules, procedures and practices (paragraph 47)

The UK construction industry has many health and safety initiatives with a current focus on mental health. Contaminated land, waste management, water pollution and environmental impact assessments are construction concerns controlled by environmental law. Future UK environmental law and policy will be decided by new trading agreements and international treaty obligations. The UK construction industry is reliant on EU skilled labour but a career in this sector may not be attractive to these workers post-Brexit.
There is considerable supply chain integration of construction products for example, across the Irish border. Furthermore, the UK construction sector has been identified as particularly exposed to high tariff and non-tariff barriers and therefore liable to be negatively impacted by Brexit.

Pre-Brexit and during the transition period, EU construction-related procurement is governed by six EU regulations. Post-Brexit, the fundamental principles of the GPA are transparency, non-discrimination and impartiality with construction services and works concessions detailed in Annex 6. However, compared with EU regulations, the GPA exhibits limitations regarding enforcement, transparency, coverage, modification and remedies. Nevertheless, the EU-UK arrangement could extend beyond the GPA.
Despite the Political Declaration’s aspirations, there is no guarantee such an agreement will concluded between the UK and the EU. The default position is a No-Deal Brexit after the expiry of the transition period on 31 December 2020. The UK would then trade with the EU on WTO rules.

Jennifer Charlson is a Senior Lecturer in the School of Architecture and Built Environment at the University of Wolverhampton. The comment summarizes the argument made by the author in Charlson, J. (2019) Briefing: Brexit and UK construction law: past, present and future. Proceedings of the Institution of Civil Engineers – Management, Procurement and Law, Ahead of Print – published online 13 May 2020 (www.icevirtuallibrary.com/doi/abs/10.1680/jmapl.20.00016)

Image credit: Construction in London by Singing With Light via a CC BY-NC-ND 2.0 license

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