Without any doubt, the UK’s vote to leave the European Union has been the most divisive issue of our generation. It is true of course that the decision ‘could’ have far-reaching consequences for our everyday lives and for the industry we work in, and while the negotiations to leave are already taking on a messy and hugely complex appearance and could take up to two years to take effect, there has already been an immediate economic reaction to the vote.
It is also true that there is no blueprint for how the UK should now proceed. There is no clear path to follow, and this widespread uncertainty is the source for much of the nation’s anxiety. Industries such as the air conditioning sector, like any other, can see the potential problems very clearly, and as the reality of the vote hits home, the need to prepare diligently for the future is extremely pressing.
The general levels of high confidence within the construction industry, to which the HVAC sector is indelibly linked, are expected to take a hit after the Brexit vote, with growth and prosperity being adversely influenced by the global uncertainty. Naturally, the global economy, taxation and access to funding ‘could’ affect the risk policy of building contractors and lead to some new projects stalling, but many high profile figures believe that the industry may not necessarily see much difference.
Business Impact
Prior to the June 23rd ‘leave’ vote, JCB chairman Lord Bamford suggested the sentiments of the ‘remain’ campaign were “scaremongering”, and he believed that trade barriers with the EU would be unaffected. The truth is that nobody knows for sure. For the construction industry, and those within it such as the air conditioning sector, undoubtedly there will be likely issues with:
* the freedom of movement of skilled workers
* potential loss of insight and experience of EU counterparts in an industry requiring high technical knowledge and where new developments are hugely influential
* potentially a higher cost of materials, tools and equipment
* potentially a higher cost of labour and hence a rising cost of installation services
Over 150 of the biggest HVAC contractors were surveyed before the EU referendum and 60% of those responded that they were worried about the possible consequences of a ‘leave’ vote. Only 22% were worried about staying in the EU, while 18% felt there would be no difference either way.
Regardless of what now happens, this outlines the general uncertainty and anxiety. Of those 60% that expressed concern, they felt the main repercussions to the air conditioning industry, of a Brexit vote, would be:
* barriers to growth in sales through economic uncertainty and a shortage of skills
* a lack of EU investment in training
* changes to industry legislation
With regards this last point, whatever else happens in the wake of this epoch-defining vote, we know already that for the air conditioning industry specifically, the most influential EU regulation will not be affected by the Brexit vote.
F-GAS Regulations
The 2014 F-Gas Regulations – which imposed restrictions on the use of some HFC refrigerants and fluorinated greenhouse gases – have instigated a huge reaction in the air conditioning industry. 80% of industry manufacturers have started to phase out certain refrigerants, such as the widely-used R410a, and have introduced more environmentally-friendly solutions such as R32 refrigerants with a lower ‘Global Warming Potential’. With the remaining 20% of the industry reticent about making these changes thus far, it was initially feared that the Brexit vote would halt these regulations being fully implemented across the board.
However, the refrigerant certification body, Refcom, have moved quickly to cool this speculation. They very quickly stated that while the F-Gas Regulations were driven by Brussels, they have already been incorporated into UK law, and hence are in the British legal system. This means that there would need to be a Government U-turn in order for their implementation to be reversed, and while we have seen plenty of those with other policies, it is widely accepted that the Government, the Environment Agency and the regional agencies are fully committed to the F-Gas regulations.
So this most direct of EU influences on the air conditioning industry is not expected to change its course in the wake of the Brexit vote. However, we will have to watch this space and react accordingly, to see how the UK’s ground-breaking decision affects our supplies, our trade, our labour and our financial freedom in the coming months.