On 23^rd June 2016, a referendum will be held, in order to decide whether Britain should leave or remain in the European Union.

 

What do businesses make of the EU referendum? Well, large businesses mainly tend to be in favour of staying in the EU due to the fact it is easier for them to move people, money and products all over the world.

 

The referendum is certainly having a noticeable impact on construction firms. Main contractors are reporting lower orders and projects are being put on hold ahead of the big decision.

 

This may not seem apparent in a city like Leeds, where there is a healthy number of live sites and cranes are a significant feature on the city’s skyline. Current projects range from the new £600m Victoria Gate shopping centre in Kirkgate, to Central Square, a £200m ambitious office and leisure complex located close to the train station. These fantastic projects are now nearing completion and it seems most sites are at an advanced stage.

 

What appears to be evident in our city now are cleared sites, hoardings and fences but no activity. There is a clear lack of progress concerning the next trench of future developments.

 

This is reflected in statistics released yesterday by JLL and Glenigan, where their Commercial Construction Index showed a decline in commercial property construction during Q1 of 2016. There was £1.4bn of new build projects during this period – a 44% fall compared to the previous year.

 

The UK construction sector receives a considerable amount of funding from the EU – the EU has directly funded a significant number of major development projects in the UK.

 

If Britain were to leave the EU, would the savings made by leaving the EU be sufficient enough to fund future construction projects? Furthermore, UK politicians would be the ones making the important calls, rather than the current system of an EU funding mechanism, which considers actual need and measurable benefit. Would this be a step forward or a significant step backwards?

 

Remaining in the EU seems to be the favourable outcome for many in the construction industry – with only 15% favouring an exit from the EU. Access to labour is a significant worry connected with leaving the EU. Renegotiations will have to take place, following a possible exit. This, in turn, will lead to tougher access to labour which is critical to fill the skills gap in the UK.

 

After a slow quarter, the construction sector is likely to bounce back, resulting in an increased demand for labour. Free movement from EU members is imperative – meaning the construction industry is unlikely to back a British exit from the EU.  If not, the UK will have to invest a lot of money into training British workers to fill the gap. Something which could take a decade to achieve.

 

The uncertainty surrounding the construction industry will lift almost instantly if the outcome of the vote is that we stay in the EU – business as usual.

 

If the voting public decide we should leave the UK, where will that leave the development pipeline, not just in Leeds but across the UK?

 

Could the UK economy cope with a potential downturn in the construction sector?

 

6 weeks until we take to the polls. Make your vote count.