New local impact analysis shows the North West and Midlands will be severely exposed to a double economic hit from Brexit and coronavirus if the UK exits the Brexit transition period without a deal in place at the end of the year.
The report, entitled ‘Assessing the economic implications of coronavirus and Brexit’, has been released today ahead of the final round of UK-EU negotiations and before UK and EU leaders meet to discuss the progress of talks. It focuses on the impact of ending the Brexit transition period on 31st December 2020 in light of the current public health crisis.
The Social Market Foundation (SMF) report was commissioned by cross-party group Best for Britain. It examines, in the context of ‘U-shaped’ recovery from a coronavirus induced recession, the economic impact of both a new Free Trade Agreement and leaving the European Union without a trade deal. It seeks to provide an understanding of which sectors, regions and local areas in the UK will be most exposed to both supply-side shocks. Its main findings include:
- If the UK leaves the EU without a deal in place on 31st December 2020, the manufacturing, banking, finance and insurance sectors would be severely exposed to a double economic hit from Brexit and coronavirus.
- While London and the South of England would be highly exposed to the double economic hit caused by Brexit and coronavirus under an FTA, leaving the EU without a deal in place would create pockets of severe disruption across the country, and particularly in the North West and Midlands regions. 50% of local areas (NUTS3) in the North West are placed in Category 5 (the highest) and a further 40% in Category 4 for their exposure to a double economic hit based on the gross value added of sectors locally.
- Analysis of local area impact based on employment shows there are 66 local areas in the most severe category of impact if the UK leaves the EU without a trade deal at the end of the year. One-sixth of these areas have more than a third of their labour market working in either manufacturing or finance, banking and insurance etc. (the two industries most impacted). Four of the 66 areas have more than 100,000 jobs in these two industries.
- If the UK exits the transition period without a trade deal in place, it is likely that the Government would need to bring about a stimulus package to support specific industries and parts of the country. Given the large increase in government expenditure as a result of coronavirus it is hard to see how the UK could afford another stimulus package in early 2021 without adding to already unprecedented borrowing and potentially testing the patience of gilt buyers.
Best for Britain CEO Naomi Smith said:
“This report, which maps the impact of both shocks, definitively rebuts any speculation that the impact of leaving the transition period could be masked by the coronavirus recession.
“The data is clear: when you scratch beneath the surface, so many key sectors will be exposed to a dangerous double whammy of economic hits.
“When you map these findings onto the UK’s geography, it shows that particular areas of Britain, such as the North West and Midlands regions, will be disproportionately harmed. These include many former ‘red wall’ seats that switched from Labour to the Conservatives at the last election.
“With public debt spiralling, the Government is boxing itself into a fiscal corner unless it extends the transition period and secures a trade deal at the end of the ongoing negotiations.”
SMF Director James Kirkup said:
“The evidence shows that both ending our close trading relationship with the EU and the measures taken to combat the coronavirus will have negative impacts on the UK economy as a whole.
“In some cases and some places, that double impact will be severe. At base, this report demonstrates the simple fact that leaving a developed free-trade agreement with our nearest and largest trading partners at the same time as facing a pandemic will expose many local areas of the UK to a painful double economic impact.”
About the report
The full report, ‘Assessing the economic implications of coronavirus and Brexit’, can be downloaded here. You can find a methodological note for the report here.
The SMF report was commissioned by cross-party group Best For Britain. The SMF retained full editorial independence. The SMF, a registered charity, is committed to disclosing all its sources of funding.
Local areas in Category 5 of GVA impact under coronavirus and WTO terms
|
Local area |
Region |
Jobs in severely impacted sectors |
|
Hartlepool and Stockton-on-Tees |
North East (England) |
25% |
|
West Cumbria |
North West (England) |
28% |
|
Manchester |
North West (England) |
25% |
|
Greater Manchester South West |
North West (England) |
29% |
|
Greater Manchester South East |
North West (England) |
30% |
|
East Lancashire |
North West (England) |
30% |
|
Chorley and West Lancashire |
North West (England) |
26% |
|
Warrington |
North West (England) |
30% |
|
Cheshire East |
North West (England) |
29% |
|
Cheshire West and Chester |
North West (England) |
29% |
|
Wirral |
North West (England) |
25% |
|
York |
Yorkshire and The Humber |
23% |
|
Leeds |
Yorkshire and The Humber |
29% |
|
Calderdale and Kirklees |
Yorkshire and The Humber |
30% |
|
Derby |
East Midlands (England) |
28% |
|
South and West Derbyshire |
East Midlands (England) |
29% |
|
West Northamptonshire |
East Midlands (England) |
34% |
|
North Northamptonshire |
East Midlands (England) |
26% |
|
Worcestershire |
West Midlands (England) |
27% |
|
Telford and Wrekin |
West Midlands (England) |
29% |
|
Birmingham |
West Midlands (England) |
27% |
|
Solihull |
West Midlands (England) |
31% |
|
Dudley |
West Midlands (England) |
26% |
|
Peterborough |
East of England |
28% |
|
Norwich and East Norfolk |
East of England |
24% |
|
Luton |
East of England |
26% |
|
Hertfordshire |
East of England |
27% |
|
Central Bedfordshire |
East of England |
30% |
|
Southend-on-Sea |
East of England |
34% |
|
Essex Haven Gateway |
East of England |
27% |
|
West Essex |
East of England |
34% |
|
Heart of Essex |
East of England |
29% |
|
Essex Thames Gateway |
East of England |
25% |
|
Camden and City of London |
London |
39% |
|
Westminster |
London |
41% |
|
Wandsworth |
London |
39% |
|
Tower Hamlets |
London |
34% |
|
Haringey and Islington |
London |
27% |
|
Lewisham and Southwark |
London |
28% |
|
Bexley and Greenwich |
London |
28% |
|
Redbridge and Waltham Forest |
London |
28% |
|
Enfield |
London |
21% |
|
Bromley |
London |
35% |
|
Croydon |
London |
28% |
|
Merton, Kingston upon Thames and Sutton |
London |
30% |
|
Barnet |
London |
30% |
|
Brent |
London |
30% |
|
Ealing |
London |
28% |
|
Harrow and Hillingdon |
London |
27% |
|
Milton Keynes |
South East (England) |
28% |
|
Buckinghamshire CC |
South East (England) |
31% |
|
Brighton and Hove |
South East (England) |
26% |
|
East Sussex CC |
South East (England) |
21% |
|
West Surrey |
South East (England) |
30% |
|
East Surrey |
South East (England) |
31% |
|
West Sussex (South West) |
South East (England) |
21% |
|
West Sussex (North East) |
South East (England) |
31% |
|
South Hampshire |
South East (England) |
27% |
|
Central Hampshire |
South East (England) |
27% |
|
North Hampshire |
South East (England) |
26% |
|
West Kent |
South East (England) |
27% |
|
Bristol, City of |
South West (England) |
26% |
|
Bath and North East Somerset, North Somerset and South Gloucestershire |
South West (England) |
26% |
|
Gloucestershire |
South West (England) |
29% |
|
Swindon |
South West (England) |
34% |
|
Wiltshire |
South West (England) |
28% |
|
Bournemouth and Poole |
South West (England) |
29% |
|
Dorset CC |
South West (England) |
27% |
|
City of Edinburgh |
Scotland |
25% |
|
Ards and North Down |
Northern Ireland |
N/A |
Source: SMF analysis
Local areas in Category 5 of job impact under coronavirus and WTO terms
|
Jobs in manufacturing & banking finance |
|||
|
Name |
Region |
Number of jobs |
Percentage of all jobs |
|
Westminster |
London |
49,500 |
41% |
|
Wandsworth |
London |
74,400 |
39% |
|
Camden and City of London |
London |
52,800 |
39% |
|
Kensington & Chelsea and Hammersmith & Fulham |
London |
61,700 |
38% |
|
Bromley |
London |
58,800 |
35% |
|
Lambeth |
London |
66,800 |
35% |
|
West Northamptonshire |
East Midlands (England) |
68,200 |
34% |
|
Tower Hamlets |
London |
57,100 |
34% |
|
Southend-on-Sea |
East of England |
29,100 |
34% |
|
Swindon |
South West (England) |
37,400 |
34% |
|
West Essex |
East of England |
48,300 |
34% |
|
Flintshire and Wrexham |
Wales |
43,100 |
31% |
|
Buckinghamshire CC |
South East (England) |
80,700 |
31% |
|
East Surrey |
South East (England) |
60,500 |
31% |
|
Solihull |
West Midlands (England) |
29,900 |
31% |
|
West Sussex (North East) |
South East (England) |
61,600 |
31% |
|
Leicester |
East Midlands (England) |
51,200 |
31% |
|
Merton, Kingston upon Thames and Sutton |
London |
93,200 |
30% |
|
Warwickshire |
West Midlands (England) |
83,000 |
30% |
|
Warrington |
North West (England) |
31,200 |
30% |
|
Barnet |
London |
57,600 |
30% |
|
West Surrey |
South East (England) |
118,400 |
30% |
|
Calderdale and Kirklees |
Yorkshire and The Humber |
86,200 |
30% |
|
Falkirk |
Scotland |
22,300 |
30% |
|
Greater Manchester South East |
North West (England) |
70,700 |
30% |
|
East Lancashire |
North West (England) |
43,400 |
30% |
|
Central Bedfordshire |
East of England |
42,600 |
30% |
|
Brent |
London |
46,800 |
30% |
|
West Lothian |
Scotland |
26,600 |
29% |
|
Kingston upon Hull, City of |
Yorkshire and The Humber |
35,000 |
29% |
|
Cheshire East |
North West (England) |
53,000 |
29% |
|
Greater Manchester South West |
North West (England) |
68,800 |
29% |
|
Monmouthshire and Newport |
Wales |
31,700 |
29% |
|
Bournemouth and Poole |
South West (England) |
50,200 |
29% |
|
Gloucestershire |
South West (England) |
89,300 |
29% |
|
Cheshire West and Chester |
North West (England) |
44,900 |
29% |
|
Heart of Essex |
East of England |
44,200 |
29% |
|
Leeds |
Yorkshire and The Humber |
109,000 |
29% |
|
Hounslow and Richmond upon Thames |
London |
65,600 |
29% |
|
Berkshire |
South East (England) |
131,100 |
29% |
|
Peterborough |
East of England |
26,300 |
28% |
|
Lewisham and Southwark |
London |
99,700 |
28% |
|
Bexley and Greenwich |
London |
75,900 |
28% |
|
Walsall |
West Midlands (England) |
34,300 |
28% |
|
Milton Keynes |
South East (England) |
37,700 |
28% |
|
Ealing |
London |
45,600 |
28% |
|
East Merseyside |
North West (England) |
59,100 |
28% |
|
South Nottinghamshire |
East Midlands (England) |
47,100 |
28% |
|
Hackney and Newham |
London |
90,600 |
28% |
|
Redbridge and Waltham Forest |
London |
78,500 |
28% |
|
Croydon |
London |
52,100 |
28% |
|
Wiltshire |
South West (England) |
63,200 |
28% |
|
Hertfordshire |
East of England |
160,400 |
27% |
|
Essex Haven Gateway |
East of England |
58,100 |
27% |
|
West Kent |
South East (England) |
48,700 |
27% |
|
Haringey and Islington |
London |
77,100 |
27% |
|
Harrow and Hillingdon |
London |
67,000 |
27% |
|
Swansea |
Wales |
28,600 |
27% |
|
North Northamptonshire |
East Midlands (England) |
44,900 |
26% |
|
Thurrock |
East of England |
22,200 |
26% |
|
Brighton and Hove |
South East (England) |
40,900 |
26% |
|
Luton |
East of England |
25,300 |
26% |
|
Edinburgh, City of |
Scotland |
67,900 |
25% |
|
Barking & Dagenham and Havering |
London |
53,900 |
25% |
|
Essex Thames Gateway |
East of England |
43,700 |
25% |
|
Manchester |
North West (England) |
64,000 |
25% |
Source: SMF analysis