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Brexit means two years of uncertainty, financial instability – and tough decisions

Christine Murray
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As the pound crashes and David Cameron resigns, there is no question that UK architecture plc is in trouble

It is difficult to find something positive to write about this morning. Like many of you, I was shocked to wake up to news of a two-year road to Brexit. 

Worse still, the referendum map of the country forecasts the inevitable break-up of the United Kingdom. The political turmoil will not end with this referendum, but trigger up to a decade of uncertainty and threats to the pound as Northern Ireland and Scotland follow with attempts to secede.

As for now, the pause that has gripped the construction market is over. Projects cast in doubt will now go on hold indefinitely. This impact will be exacerbated by the falling pound, which sees the buying power of your clients severely diminished, with everything from timber to kitchens from Europe now 10 per cent more expensive. If these projects are not put on hold in the hopes of a currency recovery, they will be subject to extreme cost-cutting.

The further threat is that multinational companies will now make two-year plans to relocate their headquarters out of England, and Britain in general if Scotland does not manage to sort itself out quickly. (This happened in Quebec in the lead-up to the failed separatist referendum, with even the HQ of the Bank of Montreal leaving Montreal, never to return.) We can expect, in addition to residential turmoil, major office projects to go on hold. It has been rumoured that Dublin may benefit from this exodus, so practices with offices there may have an advantage. It could be that Scotland-based practices, too, have a hope if they can negotiate their own deal before October. Longer term, the largest UK practices may invest in their European outposts, while shrinking the local workforce in response to market demand. We expect redundancies and the further use of short-term contract employment as practices retract.

The severity of the damage will depend on how frosty relations with Europe are likely to be, which may be gauged over the coming months regarding their willingness in the negotiation of new trade agreements. It is feasible that the European Union will want to make an example out of Britain, and stabilise the common market by showing just how bad an idea Brexit has been. In order to do this, it is critical that Britain suffers, so I don’t expect Brussels to play nice. 

Silver linings? They are difficult to spot. The weakened pound has made architects’ fees in the UK more attractive to those buying services from abroad – but for most architects, this is not really helpful. Tourism may benefit from the UK being a cheaper place to visit this summer. There is, however, very little to be cheerful about. The people have made an inconceivably stupid decision to leave the European Union. As an Italian architect said to me, ‘With Brexit, we no longer need to be embarrassed about Berlusconi’.

It doesn’t yet feel real or even possible that 40 years of union – the longest peacetime in Western Europe since the Roman Empire – are set to end. But we need to adjust to this new paradigm as quickly as possible. This is a resilient profession, but we are in for a bumpy ride.

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Readers' comments (1)

  • Silver linings? If George Osborne is to be believed, perhaps there'll be a London property values crash - with housing becoming more affordable .
    But then, that would be scant consolation to young architects watching their jobs vanish - and the overseas purchase of London housing might even accelerate, in time.

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