Hard Brexit jeopardises UK's £4 billion architecture industry

A survey of the Royal Institute of British Architects members has revealed that the majority have considered relocating in the two years since the 2016 Brexit referendum. Three quarters of those polled also said that growth of their international workload would be impaired without single market access – something which is jeopardised by the UK Government’s present plans.

With one year left until the conclusion of Brexit negotiations, 2018 is a critical year for UK businesses across every industry. Forecasts on the impact of the UK’s secession from the European Union usually tend to focus on heavy industry, with manufacturers in particular being regularly tapped for their opinions on the matter. However, a new report from the Royal Institute of British Architects (RIBA) has cast new light on a multibillion industry often overlooked by Brexit studies.

The ‘Global by Design’ report, provides a comprehensive survey of UK architects’ views on Brexit. The poll, which RIBA ran at the turn of the year, takes into account the opinions of some 1,000 members of the institution, and follows up on an original investigation carried out in 2016, after the UK’s fateful referendum returned a shock ‘Leave’ result, publishing their findings in early 2017, near the triggering of Article 50, which signaled the formal beginning of Brexit.

The UK’s architecture industry contributes an estimated £4.8 billion Gross Value Added (GVA) to Britain’s economy each year. The findings of RIBA’s report cast the industry’s future prosperity into doubt, however, as a so-called ‘Hard Brexit’ could see major restrictions placed on cross-border trade between the UK and EU.

71% percent of architects believe Brexit is going to have a negative impact on the built environment, compared to 60% percent in the 2017 survey – suggesting that faltering discussions between the UK Government and the EU have majorly impacted the industry’s confidence of a workable deal being reached. This is in line with the broader picture for UK business, with a study from Eden McCallum at the start of 2018 showing a dramatic decline in businesses’ hopes on the matter. 82% of respondents were pessimistic about what 2018 and 2019 will bring to the UK economy – a damning contrast to 2015’s figures, when over 70% were found to be optimistic about the UK’s economic prospects for the next 1-2 years.

A large part of the architectural sector’s pessimism seems to stem from the fact it is so heavily reliant on easy international trade. The UK architecture industry is the largest exporter of architectural services in Europe, and according to RIBA’s report, since the referendum, one fifth of architects have considered taking on even more work internationally. This point is further driven home by the fact that 74% of architects believe that access to the EU single market is necessary, if they are to expand their international workload. Without this apparent life-line, future growth in the industry could be severely hamstrung.

The 2018 report also reveals that 68% of architects have already seen Brexit impact their revenue stream, as they had projects put on hold. On top of this, more than 2 in 5 architects (43%) had projects cancelled since the EU referendum. Both figures represent a further rise on the previous results, which saw 61% experience delays and 36% endure cancellations.

Talent exodus

Many industries are facing a shortage of labour in coming years, with an ageing population rapidly approaching retirement potentially leading to a premium in wages for skilled employees. This could well be further driven home by Brexit. According to a recent study by Big Four firm KPMG, with Brexit negotiations continuing to cast doubt over freedom of movement between the UK and Europe, young, well-educated and high-earning EU nationals are the most likely group to be planning to return to the mainland. As many as 10% of EU nationals with post-graduate degrees, who earn above £50,000 a year are considering the move, creating the potential for a large talent shortage for employers, and placing a strain on public services such as the NHS.

While the impact of this has mostly been looked at from the perspective of public services and the financial sector – which could see some 75,000 jobs relocate from London alone – the architectural scene would likely be similarly stricken by a shortage in talent, should a Brexit be realised that does not protect the right of EU workers to move freely across borders.  At present, a mutual recognition of professional qualifications directive (MRPQ) enables the free movement of professionals in recognised industries, such as doctors or architects, within the EU. Without this in place, even with free movement rights in place, protected industries would have no standardised way of recognising the equivalency of degrees obtained in different countries, potentially making it very difficult for skilled workers to find employment in Britain.

While the UK Government has issued statements in support of an ongoing MRPQ with the EU post-Brexit, nothing has been formally agreed upon, and with a year to go until the close of play on negotiations with Brussels, the architectural industry has become increasingly worried about this lack of certainty. Nearly half of repondents (47%) working for large practices told RIBA they are concerned that the prospect of no MRPQ agreement could see them lose valued staff. Confirming these fears, 60% of architects questioned said that they have considered leaving Britain due to Brexit, an increase of 20% since RIBA’s initial survey 2016.

Call for action

Following these worrying findings, RIBA issued a series of policy recommendations for the Government in response to the survey results. In order for the Government to maintain the UK's global role in architecture, RIBA’s recommendations include a deal with the EU that maintains market access, avoids non-tariff barriers, and new services trade agreements with priority markets that open new opportunities for UK architecture. The institution would also be keen to see a post-Brexit immigration system implemented which could facilitate its HR needs, along with an expansion of the scope and range to support architectural exports, particularly for small- and medium-sized practices, and continued mutual recognition of architects’ professional qualifications with the EU.

This last point was recently addressed by UK Prime Minister Theresa May. In a speech setting out the embattled Conservative leader’s vision for a post-Brexit economic relationship between the UK and the EU, May said, “Given that UK qualifications are already recognised across the EU and vice versa, it would make sense to continue to recognise each other’s qualifications in the future.”

RIBA responded positively to the statement. However, as per the report, the institution remains keen to see policy points put into action. RIBA Chief Executive Alan Vallance said, “While our calls for continued mutual recognition of qualifications are being heard, many EU architects continue to face uncertainty about their future in the UK. This is unsustainable: it is having a real-time impact on recruitment and is unquestionably a threat to the success of our economy and society. The UK Government must make urgent decisions that allow the sector to thrive today.”

Meanwhile, in what some may fear is an ominous sign of things to come, news has since broken that architectural practice Conran and Partners will make a handful of redundancies. The firm has stated the decision was taken due to the unpredictability of the market, partially caused by Brexit.

A spokesperson for the practice remarked, “While we have a very strong order book for the coming year with some exciting opportunities in the pipeline we have, like many others in the industry, seen delays to the start of projects or stages of projects. There seems to be a general view that uncertainty – at least in part due to the Brexit process – is contributing to these delays. Our approach is to respond tactically to the current market situation, something which we have always done.”

RIBA is the latest in a succession of industries to warn the Government over a Brexit deal which restricts the free movement of labour. Recently the European consulting industry issued a joint call for all governments across the EU to support open trade and easy movement of consultants between the EU and the UK after Brexit. The leaders of thirteen national consulting associations, including the MCA, published the collective manifesto at a special meeting of the industry’s European Federation at the end of last year.

Related: Decreasingly 'open' UK's growth prospects hit by Brexit instability