Analysis of data from EU member states, the central EU database, Eurostat and the UK department for Business, Energy and Industry show that the cost of materials and labour for construction have increased more in the UK than the EU since Brexit. The data shows that the cost of construction materials including cement, timber and steel increased by 60% between 2015 and 2022. At the same time, the cost of labour in the UK went up by 30%. In the same time period, the cost of materials increased by 35% in EU countries, despite similar pressures including supply chain issues.
This data is set to deepen growing concerns over labour shortages in the UK. The Office for National Statistics show that more than one in three construction businesses experienced a shortage of workers at the end of last year. The value of construction material exports decreased by £514 million in the third quarter of last year – down 8.2% on the previous quarter.
All of these factors, are set to continue the slowing rate of growth in the construction sector, eventually causing growth in the industry to grind to a halt – Fix Radio, the UK’s only national radio station for tradespeople predicts. The implications of Brexit on the construction sector have heavily weighed on the sector and businesses are struggling to keep afloat, with Fix Radio finding that close to 40% of young sole traders saying their business is on the verge of breaking point. Fix Radio found this is partly because they lack entrepreneurial mentorship and guidance, with 27% highlighting they want to scale their business but are currently not equipped with the knowledge or resources to do so.
These businesses, which are typically family-run and employ fewer than 50 workers — are already being hampered by sharply rising costs, from shipping to energy and materials to labour. Bankruptcies in construction are outstripping those in every other sector in the UK – according to the latest ONS statistics. In April alone, almost 400 SME’s went bust, representing a near-50% increase compared with January 2020, before the pandemic.
Key stats:
36% of Millennial and Gen Z tradespeople said their business is on the cusp of collapse due to lack of guidance
27% of young sole traders said they really want to make my business bigger but don’t know how to
35% of young sole traders say their levels of stress and anxiety are now at the highest levels of their life
29% of young tradespeople have lost over £1000 in the last year due to clients not paying for the job they have done
31% of Gen Zs working in the trades said they find discussing money the most difficult part of the job
34% of young tradespeople working in the trades said their biggest aid to their business would be education around client interaction
The need to improve the support available to younger employees and business owners in the industry is further highlighted by the high levels of mental health-related issues, with 35% of young tradespeople saying they are suffering from the worst stress and anxiety in their lifetime.
In addition to this, Clive Holland, broadcaster on Fix Radio, reveals how the current economic situation has put pressure on the construction industry:
“The economic crisis is affecting the industry as we speak and it’s actually getting worse now, creating what I class as a ‘perfect storm’. We had Brexit and we had the problems that Brexit brought, particularly with the huge amount of foreign workers going back home. This leaves us with a shortage of approximately a quarter of a million people for the next five years. So, it’s important that we encourage youngsters leaving college to come into the industry to ease the pressure on the existing workers.
“We’ve also got so much work coming at the minute and 27% of these small and medium-sized businesses are currently on the cusp of collapse as a result, according to the latest research we commissioned at Fix Radio. Then of course, nobody foresaw the COVID situation or what that would bring in terms of the shortage of materials and the soaring costs. The price of timber for example, has gone up by 100% in only two years.”
