Study reveals 43,000 jobs at risk in no deal Brexit
Posted by: electime 11th January 2018
New independent assessments of the potential impact of Brexit have revealed there could be 43,000 fewer jobs in construction post the EU withdrawal negotiations.
According to expert independent economic analysis commissioned by the Mayor of London, Sadiq Khan, a no deal hard Brexit could lead to ‘a lost decade – or even longer – of significantly lower growth, with the country potentially having 500,000 fewer jobs in the worst-case scenario and nearly £50bn less investment by 2030 than would otherwise have been the case.
In London alone, there could be as many as 87,000 fewer jobs and the capital’s economic output could be two per cent lower by 2030 than predicted under the status quo.
The findings are in an analysis of the potential impact of five different Brexit scenarios on London and the whole of the UK, commissioned by the Mayor last year from economic analysts Cambridge Econometrics. The document also looks at the impact each Brexit scenario could have on nine key sectors of the economy.
Ben Gardiner, director, Cambridge Econometrics, said: “This is the first time that the various impacts of Brexit – trade, investment and migration – have been comprehensively assessed across a number of key indicators and sectors at sub-national level. Our analysis is particularly valuable to local leaders because it indicates the potential impact on employment and output of Brexit under a range of scenarios, which is necessary given the uncertainty surrounding the final outcome of negotiations. Rigorous analysis and robust evidence such as this could also be usefully applied to other parts of the UK helping political and business leaders plan for the future.”
To access the report by Cambridge Econometrics, visit www.london.gov.uk/brexit-analysis
One of the major issues facing the construction sector is the shortage of skills. The sector currently relies heavily on a foreign migrant labour force. Almost 13% of construction workers across the UK were born abroad, and in London and the South East, this proportion increases to 50%. In particular, 25% of employees in the sector in London were born in the EEA31.
According to Cambridge Econometrics, once the UK leaves the Single Market, the construction sector is also likely to be affected by trade impacts. A 2010 study by the Department for Business Skills and Innovation highlights how reliant the UK construction sector is on the rest of the EU, estimating that 64% of building materials were imported from the EU, and 63% were exported to the EU.
If the UK faces a reduction in access to the EU market following Brexit, construction firms could experience an increase in their costs or a shortage of building materials, as they face an increase in tariffs or limits on quantities imported, which is reflected in the trade assumptions applied to this sector.
At the moment, the UK construction sector benefits from having access to the European Investment Bank (EIB) and the European Investment Fund (EIF), which have invested €7.8 billion in major infrastructure projects, and lent €666 million to SMEs in 201532. A loss of these financial aids could significantly impact the ability of firms to deliver big infrastructure projects such as High-Speed 2 and reduce development opportunities for start-ups.
Additionally, foreign investment could dampen due to uncertainty over the UK economy following Brexit, and as investors delay making decisions on the future of projects. This loss of potential future investment has been reflected as a fall of up to €852m in investment in the sector by 2030, depending on the scenario and the severity of Brexit.