It has been over two years since the UK officially left the EU at the end of its transition period. We can probably agree that it has been a challenging time for all of us, but how much is Brexit to blame for the turbulent last 24 months?
Back in 2020, LA posed the question: “how will leaving the EU affect London’s prime residential market?”, and two years on we can surmise that it has, fortunately, continued to prosper, albeit with a few ups and downs.
At that time, we spoke to a selection of our trusted colleagues in the market to canvass their opinions, which if you missed it, you can find it here. Now, two-and-a-half years on from the original article, we thought it was about time to revisit the subject and see how accurate their predictions were; whether Brexit has indeed affected them and, if so, in what way.
We therefore welcome once again Chris Butler, managing director of Walter Lilly, one of London’s premier building contractors; Stewart Howl, director of Tarrant Howl, a specialist recruitment company; Nick Reynolds, managing director of Xavio Design, a leading lighting consultancy; Ian Bolt, chairman of Custom Sight & Sound Ltd, a company that delivers integrated entertainment systems; and Martin Corton, MD at Rainleaf, a premium timber flooring contractor.
The conversations prompted some interesting responses. We’d love to know what you think.
Chris Butler, Walter Lilly
He was never a fan of Brexit, thought it was a bad thing two years ago and has not changed his mind since. While he is not prepared to blame cost increases and shortages on Brexit – believing these are mainly the result of rising energy prices and the war in the Ukraine – acute labour shortages are a different matter.
“I believe labour shortages to be a direct result of Brexit,” he claims. “We now need to attract more people into the industry from all walks of life and to all trades and disciplines. This is on top of increased costs, which has slowed things down for our industry.”
“I believe labour shortages to be a direct result of Brexit”
“That said, although Brexit is still with us, the pent-up spending frustration from Covid and now Ukraine has kept the industry going, but 2024 could be tricky though.”
Stewart Howl, Tarrant Howl
Like Chris, Stewart did not want the UK to leave the EU. He thought it was a bad thing two years ago as well and has seen no reason to change his mind. However, he admits that it is difficult to give a precise answer in terms of whether things have got better or worse as a direct result of Brexit.
“There have been additional factors which include Covid, Putin’s invasion of Ukraine and Liz Truss’ disastrous mini-budget,” he said, “but, if you compare the UK’s growth with the other G7 economies, we are very much lagging behind, which would suggest that Brexit is having a significant impact.”
“If you compare the UK’s growth with the other G7 economies, we are very much lagging behind”
“As a specialist recruiter in the architectural and design sector and since my contribution to the last article, there has been a very real reduction in the availability of suitable candidates. More EU citizens have returned to their home countries and they are not being replaced by new arrivals due to the need for visas and sponsorship, making the UK a less attractive country to come and work in.”
“More EU citizens have returned to their home countries and they are not being replaced by new arrivals due to the need for visas and sponsorship”
“In recent months, there has also been a significant reduction in vacancies and I would suggest this is due to our current economic situation creating uncertainty, which I’m confident Brexit has played a part in.”
Stewart does, however, admit that a shortage of good candidates has been something of a double-edged sword. The lack of available candidates, he says, has meant that employers need to turn to recruiters more as they cannot attract as many candidates themselves.
“I’ve had a lot more enquiries from new clients, increasing my client-base without direct sales activity but, the vacancies have become a lot harder to fill, requiring far more time, effort and cost,” he added.
“I think the UK Government needs to review their immigration policies but, sadly, I don’t think they have the appetite to do so, as this would mean admitting Brexit is having a negative impact. Overall, things feel more difficult and uncertain right now and I’m positive Brexit is contributing to this.”
“Overall, things feel more difficult and uncertain right now and I’m positive Brexit is contributing to this.”
Nick Reynolds, Xavio Design
Nick is a little happier with Brexit than our previous two contributors, particularly as it allowed the government to act more decisively during the Covid pandemic than our continental neighbours, but he admits that the volume of paperwork now associated with dealing with the EU has been a major hassle and a barrier to working with Europe. For him and his company, it therefore means things have got worse.
“We really need a free trade deal with Europe.”
“We really need a free trade deal with Europe,” he said. “Nobody benefits from the tariffs and ridiculously detailed paperwork involved in the transit of goods between the UK and Europe. The obvious solution for us is for lighting manufacturing to increase within the UK, however many components would still need to be imported either from Europe or the Far East and it will take a long time for these new manufacturers to be able to compete with the long-established mammoth factories in the Netherlands, Germany and Italy.”
On the positive side, Nick claims it would have been business as usual if they had worked exclusively on UK projects with UK suppliers. He would not have noticed any change. Brexit has not reduced the number of new projects and it is still easy to recruit European designers if they have the ‘right to work’ in the UK.
“We need to negotiate a free trade deal with Europe, axe all paperwork and tariffs on the transit of goods, and this would benefit both parties,” he adds. “Europe has a huge amount of lighting manufacturers who must be seeing a big drop in exports to the UK due to the excessive administrative difficulties in shipping across the Channel.”
“But, in terms of the super-prime market, Brexit is really the least of the worries. The terrible Ukrainian war, the rocky whirlpool of British politics and the powerful ripples in the banking world have caused much greater problems and uncertainties. The super-prime residential and luxury hospitality markets have great inner strength and a superb ability to rise above serious problems on the global stage… I’m sure that the UHNWI world will always continue to remain a brilliant sector in which to operate.”
“I’m sure that the UHNWI world will always continue to remain a brilliant sector in which to operate.”
Ian Bolt, Custom Sight and Sound
There are no grey areas for Ian – Brexit was simply a dreadful idea and he has not changed his mind. For him, stating that the UK wished to have fewer ties with our neighbours sent a message of isolation and selfishness that left an unpleasant taste.
He further claims that events since Brexit have shown more than ever that the UK needs a wider community and understanding of alternative views, not a greater sense of self, adding that “we should not have put our self-interest above our social conscience.”
“We should not have put our self-interest above our social conscience.”
In answer to the question do you think things have got better or worse for your industry, Ian says that there is no easy response.
“As we are small, our view on this can be affected by success or failure that has nothing to do with Brexit or market conditions. We could simply have been fortunate to have won a good level of work that skews our opinion as we could be succeeding in a market that is in fact more limited. What is true is that the complexities of our suppliers’ delivery have been affected, but this did seem to settle quickly,” he said.
Ian also admits to being less optimistic post-Brexit, but not for business reasons, more for the overall social impact that leaving the EU has delivered.
Martin Corton, Rainleaf
Martin was always a eurosceptic, feeling strongly that the EU’s federal inclinations had gone too far. His view of the goal for Europe was one where “collectively we protected each other militarily and we facilitated seamless trade and co-operation” without becoming the United States of Europe.
The results of Brexit haven’t changed his view. “But”, he says, “what I didn't account for was the sheer incompetence of our nation’s government. Brexit has been more difficult than I planned for and ever understood.”
“What I didn’t account for was the sheer incompetence of our nation’s government. Brexit has been more difficult than I planned for.”
“We import wood flooring material direct from Germany that is made specifically for each project. It is far costlier than I ever imagined; it’s far more complicated that I could have envisaged; and it impacts on project performance. When we have projects in the Middle East, we now have to land our material in the UK and then send it direct to the country in which our project is located. Invoicing us in the UK for a project that’s in Israel is now beyond the wit of man!”
Martin concludes that perhaps for his own short-term comfort, his views on Brexit might be different now to two years ago, but for his children his views are unchanged.
Summary
The responses to our questions show how divisive Brexit continues to be politically. However, whatever their political views, there is a consensus among our contributors that the implementation of Brexit by the UK government has been at best unhelpful, at worst disastrous.
And it is interesting to see that they were absolutely right two years ago: their predicted concerns about both labour and international supply chains have both since become significant obstacles to our industry. Recruiting the best talent is harder, with a much-reduced pool of candidates, and supply shortages and the bureaucracy of importing from and exporting to the EU hitting hard.
What’s your view? We’d love to hear from you. Leave your comment below.