On 24th December, the UK and the EU established a post-Brexit agreement. This eleventh hour deal has allowed many to start the new year with greater confidence. However, some of the housing industry remain uncertain over the logistical aspects.
The headline for the new build industry, is that the deal is intended to create a free trade zone. As a result, exports and imports between the UK and EU should continue relatively similarly to before. The Prime Minister announced with some satisfaction that ‘for the first time in the history of EU agreements’ the deal incurs ‘zero tariffs’. As he went on to explain, it ‘will allow UK goods and components to be sold without tariffs and without quotas in the EU market.’
This free trade is likely good news for construction, as it reduces the chances of disruption to supply lines and allows companies to plan ahead with greater certainty. It also means that the new build industry won’t face extra charges on imported goods, which would squeeze profitability and likely have to be passed onto the consumer. The increased certainty also prevented a sharp drop in the value of the pound, which may have occurred in the event of a no-deal. Again, this may be welcomed by businesses feeling the financial impact of coronavirus and the resulting restrictions.
James Butcher, head of policy at the National Federation of Builders, is one of many who have praised the deal in their response: ‘What this means is that in January we will not see the inflationary shock of tariff and quota introductions or the expected currency depreciation associated with a no-deal. This deal delivers certainty at a time when it is needed most.’
However, many are hesitant about the practical impact. John Newcomb, chief executive of the Builders Merchant Federation, celebrated that the deal provides ‘assurance of the continued free flow of materials’. However, he also voiced concerns regarding the ‘capacity problems at UK container ports’, citing the delays in December as cause for his concern. Similarly, there are worries that the paperwork now needed to do business involving Europe will cause issues.
The deal still needs to be formally approved in January, but it is more than likely we will see the effects of the new regulations from the start of 2021.
