Balfour Beatty details post-Brexit fears


Britain’s biggest construction contractor, Balfour Beatty, has published perhaps the gloomiest post-Brexit prognosis yet, saying that major infrastructure projects are now under threat.

The Manneken Pis is one of the most famous landmark in the EU's capital, Brussels – and possibly a metaphor
Above: The Manneken Pis is one of the most famous landmark in the EU’s capital, Brussels – and possibly a metaphor

Among the concerns are continued access to labour and finance.

It is particular keen for an early clear statement that all the construction workers from mainland Europe that are in the UK should be allowed to stay.

According to Balfour Beatty, “uncertainty around the free movement of labour… may increase costs where demand for labour outstrips supply, with the subsequent risk of project delays”.

It adds: “This will be particularly relevant for mega projects such as HS2 and the nuclear new build programme.

“In our view, this requires an early and integrated policy response to both retain the skills of those who have migrated here and to ensure that the UK remains an attractive place for talented people to move to. The country must maintain its skills base.”

The document, Infrastructure 2050, warns that private investment is likely to be slow while the UK’s exit from the EU is negotiated. It adds: “Longer term, the impact on private investment in infrastructure projects is unclear, but some investors are likely to postpone decisions to make investments until the UK-EU relationship is renegotiated. Given the long lead times for major infrastructure projects, this risks delaying some of the key planned projects.”

It continues: “The impact on private investment in infrastructure is significant since, according to the National Infrastructure Pipeline, private finance dominates the UK’s planned infrastructure investment: 69% of financing is from the private sector (worth £260bn), whilst 19% is from the public sector (£73bn) and 12% is from mixed financing (£46bn). In order to attract private investment, the political and policy landscape have to be attractive and stable enough to maintain and even improve the UK’s position as a place for infrastructure investment.”

There is also uncertainty about the implications of the UK’s exit from the European Investment Bank.

Balfour Beatty notes: “The European Investment Bank (EIB) has invested £16bn in UK projects over the last three years, including the extension of the M8 motorway between Edinburgh and Glasgow and a £700m loan to the Thames Tideway Tunnel. At the moment, the UK is the joint largest shareholder in the EIB but will have to give up its equity upon leaving the EU, meaning that the UK will lose billions of pounds in infrastructure funding. This is likely to have an impact on some of the larger infrastructure projects such as Crossrail 2 and London Underground upgrades. It is unlikely that HM Treasury will be directly able to make up the amount in the short to medium term.”

In short, new funding mechanisms need to be found, it says.

There is, however, one optimistic note in the report. It says: “This could be an opportunity for the much talked about diversification of the economy away from financial services and back towards industries such as engineering, construction and manufacturing, as the UK may no longer be bound by single market rules which restrict a more active industrial policy. This, in turn, would support the rebalancing of the economy more evenly across the regions.”

The document was written by Balfour Beatty head of public affairs Veena Hudson, who joined the company in July 2015 having previously been a senior special adviser to deputy prime minister Nick Clegg.

Infrastructure 2050 also discusses how infrastructure needs will change in key areas such as rail, roads and energy and makes some recommendations on how the UK can make the transition to autonomous vehicles, flood resistant infrastructure, a decarbonised energy market and skills training.

The full report can be found at





This article was published on 21 Jul 2016 (last updated on 21 Jul 2016).

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