The only certainty from a BREXIT vote will be uncertainty

James Stewart, chairman of global infrastructure at KPMG.

James Stewart, chairman of global infrastructure at KPMG, said that the only certainty in the event of the UK voting to leave the EU was increasing uncertainty, politically, economically and financially.

Introducing a much-anticipated session at the ACE International Conference on the impact of BREXIT on the infrastructure business environment, Stewart asked “What will the impact of a BREXIT be on the infrastructure marketplace?”

Greater uncertainty was the biggest single issue, said Stewart. “No one seems to have a clue what will happen if the UK leaves the EU. If we do vote to leave then it is going to take time – two years or more – thereby increasing uncertainty. There are likely to be considerable currency fluctuations which will have an impact on investment because investors hate uncertainty,” he said.

“And that’s before you consider the political uncertainty,” Stewart said. “We all know how general elections have an effect on business, but a BREXIT will be like a general election on speed”, said Stewart.

“I can only see a downside on investment levels in the short term. All the economic models are pointing towards an economic downturn and that will put severe pressure on planned projects like HS2, the Northern Powerhouse as schemes come under greater scrutiny,” Steward claimed.

Stewart also said that European Investment Bank funding would be in doubt in the event of a BREXIT, creating even further financial uncertainty which the infrastructure sector will have to address. “If interest rates rise then that will have an impact on infrastructure too,” said Stewart.

In terms of energy, Stewart said that he did not think that there would be significant changes in prices, though being outside of Europe, the UK would not have any impact on pricing discussions and negotiations. However, a possible further Scottish independence referendum as a result of BREXIT would create more uncertainty around North Sea energy, said Stewart.

On procurement legislation, Stewart said that he thought that change would be relatively slow and current rules would continue to apply with no real changes to procurement rules in the short to medium term.

Skills though was a different matter, especially for the consultancy sector. Cutting off the supply to international labour could be an issue and the consultancy sector would feel the brunt. “Being part of the EU has helped employment mobility in the consultancy and engineering sector and I can’t see any upside from a BREXIT,” said Stewart.

As far as the overall infrastructure market was concerned, Stewart said that he saw more downsides than up from a BREXIT with projects delayed and falling investment. “The UK would be a less attractive destination for investment and labour and would suffer as a result”, he said.

“For the next couple of years there would be increased uncertainty and the UK would have less influence internationally, diminishing its influence globally,” said Stewart.

All in all, a fairly pessimistic analysis of a BREXIT vote on the infrastructure sector from James Stewart.

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