Brexit May Cause UK Construction to Hit a 'Brick Wall'

Anxious international investors have already pushed the pause button on future UK infrastructure investments since last Friday's shock result.

📅   Thu June 30, 2016 - National Edition


The UK construction industry will slam into a “brick wall” early next year due to the massive uncertainty created by the Brexit vote, an industry source has warned.
The UK construction industry will slam into a “brick wall” early next year due to the massive uncertainty created by the Brexit vote, an industry source has warned.

The British website The Independent is reporting that the UK construction industry will slam into a “brick wall” early next year due to the massive uncertainty created by the Brexit vote, an industry source has warned.

A person in the sector, who contacted The Independent but did not want to be named, said that since the shock referendum result was announced last Friday morning anxious international investors have already pushed the pause button on future UK infrastructure investments.

“Construction projects that are underway are going to continue. It's six to seven months down the line where a lot of projects are going on to ice,” said the source. “What you'll find is the construction industry potentially running into a brick wall.”

“There's a danger of a huge drop off. And if this is the situation for two years [the assumed time for the UK-EU divorce terms to be negotiated] that's an awful long time for construction companies.”

The person said up to $20 Billion of planned infrastructure investment was at risk and that foreign sovereign wealth funds were among those pulling in their horns.

A huge question mark hangs over high-profile projects such as a third runway for Heathrow and the Hinkley Point nuclear power station in Somerset.

But the source said there are also growing doubts about the future of less well-known operations such as the London Gateway port in Essex, operated by Dubai's DP World, which opened in 2013 and is still only half complete.

“We're hearing grave uncertainty [about it]” said the source. “That was built on the premise of large scale container ships from around the world using that as a point where these giant ships would dock and smaller ships would [transport the goods] straight into Europe. Now it looks like those smaller ships will have to find alternatives. They're already talking about Hamburg, Amsterdam, etc,” he said.

The source said the new outbreak of uncertainty was likely to engulf many other ambitious planned construction projects in the UK, including the Atlantic Gateway transport hub in Manchester and Liverpool.

A spokesperson for London Gateway said: “Our ability to continue facilitating UK trade with the rest of the world remains unchanged, regardless of the UK's membership of the EU. It is very much business as usual”.

The Atlantic Gateway did not immediately respond to requests for comment.

Source: The Independent