‘Brexit’ would exacerbate UK construction sector crisis: Northacre CEO

Eilidh Wagstaff, Special to
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A Brexit from the European Union would deliver a blow to the U.K.'s already struggling construction sector, cause building costs to spike, exacerbate the industry's skills shortage and slow down the delivery of affordable housing, Niccoló Barattieri di San Pietro, chief executive of London-listed luxury property developer Northacre, told CNBC.

The recent share price performance of the UK's biggest publicly traded building companies reflects investor concern that the sector could be among the worst-hit by a potential Brexit.

Shares in Carillion, Balfour Beatty and Kier Group have all lost ground, and underperformed the FTSE, year-to-date.

Construction skills

Andrew Harrer | Bloomberg | Getty Images

"We are already in a construction crisis with a severe shortage of skilled labour," Barattieri di San Pietro told CNBC Friday, adding that a vote to leave the EU would limit the number of workers joining the industry further.

His comments echo those of Chris Blythe, chief executive of industry trade body the Chartered Institute of Building, who wrote in a 2015 report: "Construction has always relied on migration to fill in gaps in the labour market – suddenly cutting off the supply of migrant workers risks seriously damaging the U.K.'s economic prospects."

Migrant workers currently fill around 12 percent of the approximately 2.9 million U.K. construction sector jobs, according to government figures and research by the London School of Economics.

Barattieri di San Pietro predicts a post-Brexit skills shortage that would drive up industry overheads, adding: "Affordable housing margins would be hit worst as labor scarcity causes construction costs to spike, making it much less compelling to build affordable homes - not to mention feasible."

On the other side of the argument, there are many who believe a vote to leave the EU could benefit U.K. builders.

Speaking to CNBC on May 11th Kevin Byrne, founder of, said: "We did a survey of our members and asked 'has being a part of the European Union hindered the growth of your business? 20 percent said it's hindered business – that's quite a serious percentage."

Property prices

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As part of the Remain campaign, U.K. Chancellor George Osborne has warned that house prices could fall as much as 18 percent below their expected trend by 2018, if Britain votes to leave the EU. However, Barattieri di San Pietro isn't convinced the value of London properties stands to fall that drastically.

He told CNBC: "Brexit would definitely have an effect on the demand side. Having said that, we're probably going to forecast a weaker pound and that will bring the demand back in quite quickly."

Referendum uncertainty

Another worry for Barattieri di San Pietro is that a "Leave" vote could make it harder for companies to plan ahead. Speaking on CNBC he argued: "If you're starting to look at Brexit, you're looking at a slightly less stable environment for the near to medium-term."

The Northacre CEO's comments reflect concerns shared by a number of his peers in the construction industry.

Asked how Brexit would impact his business back on March 17th, Haydn Mursell, CEO of FTSE-listed construction firm Kier Group, told CNBC: "Anything that affects stability, or anything that delays decisions, is negative for the company."

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