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Electrical contractors see opportunities in Brexit

Electrical contractors see opportunities in Brexit

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The UK’s landmark decision back in June to leave the European Union has so far led to more questions than answers for UK businesses.

One month after the vote, the CBI’s chief economist Rain Newton-Smith stated that “a cloud of uncertainty is hovering over industry.” He added that there were “weak expectations for new orders, a sharp fall in optimism and a scaling back of investment plans.”

With the government still developing its aspirational model for future relations with the EU, and with formal negotiations with Brussels yet to commence, uncertainty is likely to continue for some time.

Against this backdrop, the electrical and building services engineering sector is, however, somewhat more positive, according to recent ECA survey findings.

Between 11 August and 5 September this year, some 700 respondents from across the entire sector replied to our Brexit survey, held with BESA and SELECT. This level of response, during the holiday season, is a strong indication of interest in Brexit.

Almost half of survey respondents (46 per cent) believe Brexit will have a positive impact on their company in just five years’ time, with less than one in five (19 per cent) saying it will have a negative effect. Just under one-quarter (23 per cent) said it would have no apparent impact.

It’s worth noting though that larger firms were less inclined to believe Brexit would help their business, with 3 in 10 firms (29 per cent) stating it would have a negative impact.

While in 10 years’ time, respondents were even more optimistic about the impact on their firm, with over half (51 per cent) saying that the overall effect of Brexit will be positive, while just 10 per cent believe it will be negative.

Chart 1 – What will be the overall impact of Brexit on your company?

However, many firms (47 per cent) indicated that they expected the cost of materials to increase, while a further 35 per cent said they believe Brexit will lead to delays in government construction projects.

Just 1 in 4 respondents (25 per cent) say Brexit will contribute to skills shortages. However, there were mixed views among larger contractors, with 40 per cent agreeing that Brexit would ‘worsen the shortage of qualified workers’, and 38 per cent disagreeing with this statement.

In terms of the overall impact of Brexit on policy and legislation that applies to our sector, the survey found that firms were optimistic about its impact (see chart 2 below).

Chart 2 – What effect will Brexit have on our sector in the next five years on...

Significantly, respondents said that their top negotiating priorities (for the government) were full access to the EU’s single market, tacking back control of employment legislation, and flexibility to negotiate trade deals with non-EU countries.

Freedom of movement for workers in the industry was not a top priority for most respondents, reflecting the fact that engineering contracting firms primarily rely on UK human resources.

While the mood is generally positive, it is very early days for Brexit. There are many milestones and hurdles to come, including invoking Article 50 itself, followed by politically complex negotiations. 

No matter how our relationship with Europe develops, the issues facing our sector - not least payment and skills- still need to be addressed. Our sector has a major role to play in achieving UK business growth. This includes providing skilled jobs, developing fully functional buildings and infrastructure, and contributing to UK energy security.

For now however, our members tell us it’s business as usual - including all the opportunities and challenges- for the electrical sector and wider building services industry.

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