The implications of Brexit for the construction sector

Although many firms have been put to the test in the past twelve months, the success of their creative and agile approaches gives reasons for optimism.

We’re confident that the construction sector and others will continue to show a high level of resilience and adaptability.

what does brexit mean for the construction sector

In this report:


Here are eight practical steps that construction businesses can take to prepare themselves for the imminent changes.

It has never been more important to have a full and clear picture of the entire supply chain, as Brexit-associated risk can extend well beyond your immediate suppliers.

  • Who are your suppliers’ suppliers?
  • Could they be affected?
  • Are any subcontractors exposed to possible delays at
    the border?

Every separate contract should be reviewed for Brexit implications. This will identify potential problems and prioritise a discussion of those most susceptible to risk (in terms of overruns, cost and profitability).

In a business where timings are notoriously tight, any delays along the supply chain could cause further problems.

  • Who is liable in the event of non-delivery of goods or services? Does the contract stipulate fault?
  • Does it include specific Brexit language?
  • Can timings be renegotiated?
  • Could global tariff charges or foreign exchange rate fluctuations affect profitability of a contract?
  • Is there any scope to pass on costs to a counterparty?
  • What does Brexit mean for the profit margin of each contract?

Solid management accounting and robust cashflow forecasting, which have always been important, take on a new urgency at a time when any hold-up in payments along the supply chain could cause difficulties.

Regular cashflow forecasting and robust scenario planning will give forewarning of trouble ahead. The options for accessing cash (or releasing cash from the business or working capital) should also be explored.

Bear in mind that if cash has been freed up in the short term by taking advantage of COVID-19 support schemes to delay VAT and CIS payments, this will soon come to an end – and the recent restoration of HMRC’s preferential creditor status is a good indication that non-payment will not be tolerated.

It seems inevitable that Brexit will cause additional cost in some areas, in the short term at least, such as procurement costs linked to a weaker pound, administration costs, or extra storage costs if companies need to stockpile materials.

  • Have all pricing implications been considered?
  • And are extra costs factored into pricing?

Good accounting and project management software will help to get the business through the many changes brought in by Brexit. If existing packages are not up to scratch, it is time for an upgrade.

Make sure that all software is regularly updated as requirements may change and improvement and adjustments are constantly being introduced.

The potential for overrunning contracts and projects has increased, so this is the time to check whether you are covered for any Brexit-related delays that are beyond your control.

There may be very little wiggle room in current agreements, so it is vital to review insurance contracts for any Brexit-related clauses and assess whether all risks are covered – it is becoming apparent that ‘force majeure’ contract terms may not cover Brexit-related situations.

It is likely that labour and skills shortages will be exacerbated by Brexit, at least for the moment. The planned salary cap built into the new points-based immigration system for non-EU migrant workers may restrict supply still further. It is never too early to explore any alternative sources of labour as competition is likely to be intense.

The additional admin around EU employees will also need to be carefully managed, with employers becoming responsible for checking the status of EU workers and their right to work in the UK from mid-2021. This includes part-time as well as full-time staff, regardless of their length of service; work experience students; and temporary workers. Employers are not responsible for subcontractors recruited by a third party or anyone employed directly by an employment agency.

The trade deal was only the beginning of the new UK-EU relationship. There is much more detail to come, not least the question of quality standards. It is vital to keep up with developments to allow yourself maximum time to plan.


There’s no doubt that the changes ushered in by Brexit are considerable. Adapting will take time and work. But despite any short-term disruption, the construction sector has more reason than most to remain optimistic.

The sector has fared well during the pandemic, with most sites remaining open and operating, thanks to teams who already understood the importance of health & safety procedures. Demand continues to be high: the government has already announced plans for a £1.3bn investment fund for housing and infrastructure projects as part of the UK’s economic recovery. The property and construction sector is valued, viable and has a bright future ahead.

Panel discussion:

Listen to our experts discuss the topics in this report in further detail. We discussed:


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Sam Inkersole

In 2022, Sam won the Taxation’s Rising Star award at the Taxation Awards in and was named in the Accountancy Age 35 Under 35.

Jon Wedge

While Jon’s client work focuses on the financial services sector, he also oversees the firm’s assurance service, as well as supporting the trainees following in his footsteps.


Elana joined us in 2017 as an ACA trainee, after graduating from Durham University where she had studied languages. She is now a manager in our assurance team.


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