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Challenges of Engineering Our Post-Brexit Future

Last month’s message from Theresa May as she reiterated that “Brexit means Brexit” couldn’t be much clearer. Her words signaled an end to the ‘rabbit in the headlights’ limbo period that surrounded the EU referendum and encouraged a move into a more proactive phase where we need to take control of our own destiny.

28th September 2016    |     Peter Rolton: Chairman, Rolton Group

As the government moves ever closer towards triggering Article 50 of the Lisbon Treaty, starting a two-year countdown to the UK’s departure from the EU, we must work hard to establish a secure future for the engineering industry.

The referendum has left the UK at a crossroads. Our decision to exit the EU leaves the newly-established Department for Business, Energy and Industrial Strategy with a huge challenge. Tasked with working alongside the Department for Exiting the European Union, this Government division will be responsible for ensuring that the engineering industry juggernaut continues to roll following our departure from the EU. As the industry currently supports 14.5 million jobs and contributes £455.6 billion to the economy, it's crucial we take the right path.

Among the many complications that arise with such a breakaway, the engineering industry is going to have to come to terms with new regulations and standards if the ones set out by the European Union are no longer going to be adhered to. For building services engineers the level of legal complexity prompted by leaving the EU is unprecedented, especially in the area of environmental and energy management law, with an estimated 40,000 individual items of legislation affected[1]. These standards were put in place so that the industry as a whole across Europe could continue to grow and improve – without them the UK has the opportunity to forge its own path, but must still remain mindful of how EU legislation may affect dealings with our continental neighbours. Any new UK-centric legislation must be forward-thinking, to ensure that we do not lose our place among the global elite for innovation and technology.

Brexit means that long-established trade links with the EU may have to be re-negotiated. Without the standards and support implemented by the union, the UK risks losing its place among the best for innovation and technology and being left behind on the global stage. In particular, research and development could vastly suffer without EU funding, so post-Brexit, the UK's strategy should include actions to counter this likely negative effect. The UK is renowned globally as a research powerhouse, home to four of the top 10 universities in the world, which now face the prospect of cuts to grants and public finances. Although the Government has promised that any EU funding secured prior to Brexit will be covered internally[2], this would be a huge undertaking and doesn't promise a stable solution for the long term.

Another ongoing issue to consider is the shortage of skilled labour in the engineering sector. We currently suffer from an annual shortfall of 69,000 workers[3] and this may well be exacerbated once our exit is complete, affecting recruitment and skills across the board at all levels. With one of the main sources of labour in the construction industry being EU nationals, should free movement be restricted in the future the industry will undoubtedly feel the sting of this skills shortage growing wider.

In addition to free movement concerns, EU membership also allows for the free movement of goods within the EU. This is obviously of great benefit to the construction industry which relies heavily on the import of building materials. Following Brexit, importers and exporters may incur tariffs which could increase costs for contractors or lead to a shortfall of materials – a clear negative.

It will also be incredibly complicated to negotiate a new trade deal with the European Union, and of course dealing with other international markets will present its own challenges. There will no doubt be many opportunities to forge trade links outside of the EU and build better agreements with other leading importing nations, improving the situation for UK businesses. The Department for Exiting the European Union will need to produce a holistic strategy that integrates industry and business into the wider plan for our exit from the union. As the building services engineering sector, we will need to play our own part in re-inventing the UK for this new economy to secure the resources we need for our future success – energy, skills and inward investment.

Leaving the EU may also restrict our attractiveness to global manufacturers, many of whom have seen setting up operations in the UK as an opportunity to both tap into our rich heritage of engineering excellence and also to open a gateway to business with the rest of Europe. Now that this door is imminently closing and trade tariffs could be imposed, there is little to prevent engineering giants from moving across the Channel to mainland Europe in order to continue to receive the benefits they had previously enjoyed in Britain. To counter this potentially negative impact, we will need to do everything we can to ensure that the UK is an attractive location for new manufacturing facilities; maintaining a destination that will allow global players to stay competitive amongst peers from a base in the UK.

As we begin our journey down the long road towards an independent UK, it's important that we grasp this unique opportunity to cement our place in the global economy and establish our own rules and agenda without the ties of EU regulation. Whether we are in the EU, the single market, or striking out on our own, the UK remains a significant player in the global economy, and although we will not be part of the EU for much longer, we will remain a major part of Europe. Crucially, we must remember that as one door closes, another opens, as the loss of regulation could prove to be a positive catalyst for the UK. We now have the opportunity to re-invent ourselves and by creating our own standards, enabling the UK to drive competition across the energy, materials and industrial markets and establish new global links.




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