BREXIT: project cancellations inevitable following UK vote to leave EU, says expert

This is part of Out-Law's series of news and insights from Pinsent Masons experts on the impact of the UK's EU referendum. Watch our video on the issues facing businesses and sign up to receive our 'What next?' checklist.

In particular, the resignation of prime minister David Cameron could call into question the "much-needed third runway at Heathrow", said infrastructure law expert Richard Laudy of Pinsent Masons, the law firm behind Out-Law.com. The UK government had been expected to announce plans for expanding airport capacity in the south east of England before its summer break, in response to independent recommendations published in July 2015.

"Yet further delay in the resolution of the UK's chronic airport capacity problems will be a huge and damaging setback," Laudy said.

"The underlying drivers to infrastructure growth will remain in the UK and won't go away - our infrastructure is and will remain poor until something is done about it and our population is increasing and urbanising. But with sterling devaluing and the economy predicted to shrink, the pressure on the government to fund development will be even further stretched. Inevitably some projects will be cancelled or at least delayed," he said.

Boris Johnson, who led the campaign for the UK to leave the EU and who is expected to stand for leader of the Conservative Party following Cameron's resignation, is a high-profile opponent of plans for a third runway at Heathrow Airport.

The independent Airports Commission, which was tasked with recommending how the UK could address its airport capacity needs and maintain the UK's status as a global hub for aviation, recommended that the UK government back the third runway as part of its final report last year. However, certain measures would have to be put in place to address the project's impact on the environment and the local community, it said.

Along with other businesses that rely on a large proportion of EU workers, construction firms should be putting plans in place to address any restrictions on freedom of movement that emerge over the next few years, Laudy said. Firms might also have to deal with increasing material costs; whether due to import restrictions or because of currency fluctuations and the broader economic conditions, he said.

"The UK imports much of its labour from Europe and elsewhere, 10% overall and up to 50% in London," he said. "With the threats to tighten up on immigration, all of a sudden the UK will look a far less attractive place to live and work, driving up the cost of labour. Many of our construction materials are imported and the cost of our imports will rise, contributing to rising construction costs," he said.

However, Laudy also said that some international investors would not be "put off by what they will see as the UK's short-term problems", particularly if currency fluctuations drove down the relative cost of UK infrastructure assets on the international market.

"China is the real player to watch in this next period, as it eyes up cheaper assets in the UK's key infrastructure market," he said.

"The UK's underlying infrastructure needs will remain, and with the UK struggling for funding and infrastructure assets becoming cheaper as sterling devalues, China is likely to become even more interested. It won't be put off by 'Brexit', which it will regard as a short-term issue - China will take a 50-year view," he said.