No-deal Brexit is ‘worst-case’ for construction

By Mike Hayes08 December 2020

Boris and Ursula

UK Prime Minister Boris Johnson and European Commission President Ursula von der Leyen

The Committee for European Construction Equipment (CECE) has called on the UK and the EU to reach agreement on trade relations, ahead of the 31 December transition deadline.

At a recent CECE workshop, which outlined the possible ramifications of a no-deal scenario, the organisation said this would be “the worst of all outcomes”, with speakers agreeing the costs of doing business would rise due to compliance to a double market system, additional customs procedures and disruptions in component sourcing.

Some commentators also believe a number of global OEMs could abandon their UK-based operations. This would be a disastrous scenario for the country, with, according to Chris Sleight of Off-Highway Research, 22% of all construction equipment made in the UK being produced by international OEMs.

CECE secretary general Riccardo Viaggi said, “We will all be worse off in January 2021. Complex industrial value-chains need frictionless trade, absence of tariffs and mutual recognition of markings. The expected regulatory divergence will create administrative and financial burdens that are not even imaginable in some cases, considering the depth of integration provided by the EU Single Market. Therefore, the negotiators must ensure that all efforts are made to reach a last-minute deal and prevent the worst-case scenario of no-deal.”

The UK trade body Build UK recently advised construction firms to place orders for materials earlier than usual, potentially storing them in the UK ahead of costs potentially rising between 2% and 8%, if no deal is reached before the end of December.

Build UK’s chief executive Suzannah Nichol said, “The overriding message from all businesses is the need for much earlier engagement across the whole supply chain, along with enhanced forecasting information to anticipate and manage supply and demand issues.”

Later this week, UK Prime Minister Boris Johnson is set to meet with European Commission President Ursula von der Leyen in Brussels, in what is being called a last-ditch effort to reach agreement over a trade deal.

 

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