A member of the European Union (EU) for over 40 years, the British population voted to withdraw from the European Union on June 23, 2016. But how is that going to affect the construction industry in Alberta? Because Canada’s trade agreements are with the EU, not Britain, the biggest impact is strategizing and creating new trade agreements with the UK. Many argue that Brexit has little to no impact on Canada’s relationships with Britain. In fact, the leave vote has renewed interest in creating free trade and movement between Britain and the Commonwealth countries. Speculation that the leave vote increases isolation and regionalism has been met with arguments that the UK will maintain its close bonds with the commonwealth, particularly Canada. Regardless, Canada’s current trade agreements with the UK are now void, meaning that Canadian businesses, including construction companies, will have to re-evaluate their trade strategies.
While the dust has yet to settle, Brexit’s affect on the Canadian economy has already impacted investment returns. Both Canadian businesses and government agencies (e.g. the Canadian Pension Plan) invest in Britain; the drop in the British pound translates to a drop in investment values. Because a decrease in the British pound also strengthens the US dollar, Canada may have difficulty trading with the rest of the world. Luckily for the Alberta economy, Alberta-based businesses only export 0.5% of annual goods to the UK – the least among all the provinces. However, Brexit has created concern in the construction industry for EU-adopted design codes and standards, as well as material accessibility and pricing. Any products from the EU can fluctuate in price and accessibility due to the referendum.
While market uncertainty rarely bodes well for the oil industry, Brexit could be boon for construction in Alberta and the Alberta economy as a whole. Many British expats, engineers and employees, are recruited by local construction companies for work in Alberta, and the result of the referendum has many re-thinking their plans to return home to the UK. Many will seek permanent residency in Canada, resulting in a more stable workforce for Alberta’s construction industry. Furthermore, the UK’s construction industry had already taken a major hit prior to the leave vote, with clients hesitating to sign new contracts. A strong downturn in the British construction industry could also increase emigration from Britain to Canada, given that Google searches and Twitter hashtags for “Move to Canada” have jumped following the vote.
Ultimately, Brexit has created global anxiety about economic and market uncertainty, but the overall impact remains to be seen. Enjoyed the article? Let us know on Twitter, Facebook, and LinkedIn!