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The 2017 French election – what does it mean for Brexit and construction?

9th May 2017

The 2017 French presidential election, which culminated in the second-round run-off on Sunday 7 May 2017, has been described by commentators like the Guardian’s Observer editorial as an election with “potentially momentous consequences… for the French, for Europe and for Britain”. It is arguably the most important French election in modern history.

The Economist very aptly pointed out that “this year’s presidential election, the most exciting in living memory, promises an upheaval’, with a choice between two candidates which “could revitalise the European Union, or wreck it”. As such, the effects of the French election will be felt outside France’s borders, and in the light of Brexit and the upcoming negotiations, the UK is one of the major stakeholders.

With Beethoven’s Ode to Joy as his anthem in the background, Mr Macron took the stage on Sunday for the first time as president-elect of France, showcasing his liberal and Europhilic stance as a champion of free trade, free movement and the EU – to the relief of many in Brussels. What will a Macron presidency actually mean for Brexit and the EU?

Thus far, it appears that Mr Macron is keen to see that the UK does not enjoy undue advantage over Europe, and to avoid turning Brexit into a model for single market a la carte. This could mean that the EU will carry through with its tough Brexit negotiation stance, which (as unanimously agreed at the European Summit) insists on guarantees for the rights of EU citizens currently in the UK and relegates talks of a trade deal to the backend of the negotiations. On the flip side, it could mean that the EU will become less defensive in the negotiations, given that the breakup of the EU has become less of an immediate threat, as other commentators have observed.

For the construction industry specifically, it could mean that EU tradespeople and professionals currently working in the UK would be able to stay as a result of early guarantees from the UK, but the long-term uncertainty for the free movement of workers, goods and services would remain until (if not beyond) the 2019 deadline for the negotiations. These risks have to be factored into tenders and contracts for new projects which are due to commence over the coming months and years, in order to guard against likely fluctuations in labour resources, labour costs and cost of imported materials.

In the long run, a Macron presidency could mean that the construction industry will face tougher competition from France and the EU generally, particularly when it comes to labour and professional resources. As early as February 2017, during a campaign visit to London, Mr Macron made it clear that he intended to draw “banks, talents, researchers, academics” away from the UK to France, and stressed that “the best trade agreement for Britain… is called membership of the EU”. It has even been suggested that transitional arrangements for Brexit would be on the basis of accepting the continuing jurisdiction of the European Court of Justice over the UK – a possibility also flagged by the UK’s former European Commissioner, Sir Julian King, albeit in the context of crime and security.

It is too early to tell whether Mr Macron would live up to these commitments, especially since the French parliamentary election has yet to take place (click here to see the Brexit Timeline). Nevertheless, it is a real possibility that the UK will end up with reduced market access even with a trade deal in place. Given that around 12% of the 2.1 million construction workers across the UK are from abroad according to data from the Office for National Statistics, and in London alone, the Mayor’s Report revealed that 95,000 out of 350,000 construction workers (i.e. about 25%) are from the EU, competition from France and other member states for European construction workers could strain the viability of construction and infrastructure projects in the UK.

It is thus all the more important that the industry takes a coordinated approach in bringing these issues to the fore. As the RICS recommended in March 2017, one potential solution would be for the Government to include construction professionals and workers on the “Shortage Occupations List” to encourage EU labour to continue to come to the UK. The commitment in the Chancellor’s Spring Statement to introduce “T-levels” is also to be welcomed.

The UK’s snap general election can provide a convenient and effective forum for obtaining commitments to address some of these concerns in the Brexit negotiations, in order to maintain the industry’s competitiveness vis-à-vis other EU member states. At the same time, the industry and its advisers should bear in mind this wider landscape while considering risk allocation and drafting long-term contracts for upcoming construction projects.

Mathias Cheung

Mathias-Cheung-Atkin-Chambers

Mathias’ practice covers all areas of Chambers’ work, including construction, engineering and infrastructure, energy and utilities, information technology, and professional negligence. In addition to these specialist areas, he has gained experience in a wide range of commercial disputes, including cases on fraud, insurance, assignment, subrogation, and conflicts of law. Mathias is also the winner of the SCL Hudson Prize 2015 for his essay entitled ‘Shylock’s Construction Law: the Brave New Life of Liquidated Damages?’.

As a native of Hong Kong, Mathias is fluent in both Cantonese and Mandarin, and he is therefore able to take instructions for cases involving Chinese-speaking parties and Chinese documentation in Hong Kong, Mainland China, Singapore and other jurisdictions.





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