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Warning of 'double-whammy' hit to regional economies from no-deal Brexit

By Alan Jones, PA Industrial Correspondent

Some of the UK's most deprived regions are at risk of a "double-whammy hit" to their economies in the event of a no-deal Brexit, a new report warns.

An analysis of regional manufacturing performance by manufacturing group Make UK and business advisory firm BDO LLP highlights the exposure of those regions with a high dependence on exports to the EU.

They are already suffering losses, but are likely to be most at risk from leaving the EU without a deal, said the report.

Wales, the North East and Yorkshire and Humber have a very high exposure to trade with the EU, so the risks of no-deal are likely to be felt disproportionately by these areas, it warned.

The East Midlands is also at risk, with manufacturing accounting for almost a fifth of its economy and the EU being its biggest market, accounting for just over half its exports.

According to Make UK, given Wales and the North East both contain some of the most economically disadvantaged areas of the UK, a hard Brexit is likely to prove especially damaging for these areas.

Ongoing difficulties in the automotive sector are having an "ominous" impact on manufacturing and those regions most closely linked to the industry, such as the West Midlands and the North East, said the report.

Stephen Phipson, chief executive of Make UK, said: "Although Brexit stockpiling put manufacturing on steroids for a little while, the industry has since gone almost cold turkey and the overall picture over the last year now shows Brexit, global trade wars and the economic downturn in major markets are menacing UK manufacturers.

"In particular, there are some regions of the UK with a very high exposure to trade with the EU and who are likely to suffer a disproportionate double whammy to their economies and jobs from a damaging no-deal exit."

Tom Lawton, of BDO, added: "The long-term uncertainties around Brexit, minimal progress on the Government's industrial strategy, technological disruption, skills shortages and heightened global competition are all taking their toll on the performance of manufacturers across the UK.

"Companies are already holding back on investment as a result of the prolonged period of Brexit instability and risk lagging behind their global competitors when it comes to the uptake of industry processes and technology.

"It will be difficult for many manufacturers to regain lost ground in these areas particularly as digital transformation picks up pace."

A Government spokesman said: "We want every part of our country to benefit from the opportunities of Brexit.

"On October 31, we would prefer to leave with a deal and we will work in an energetic and determined way to get that better deal, but we are making all necessary preparations to make sure we are fully ready if that is not possible, including guaranteeing EU-funded programmes to give certainty to UK organisations receiving and applying for funding.

"We are determined to level up every part of the country which is why we are investing billions of pounds through City and Growth deals across all parts of the UK, and launched the £3.6 billion Towns Fund to create jobs, boost economic growth and deliver prosperity everywhere."

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