Cambridge is expected to have the fastest-growing city economy in the UK in the three months following the scheduled date for leaving the EU, according to a new report published today.
The UK Powerhouse report by law firm Irwin Mitchell and the Centre for Economics and Business Research (Cebr), says Cambridge, Reading and Milton Keynes will see year-on-year GVA growth in the 12 months to Q2 2019 around the 2% mark. Places like Newcastle and Liverpool on the other hand are expected to see growth at below 1%.
Pointing to the growth in economic hotspots, the report says many locations in the South and East of England have increasing amounts of highly skilled jobs in the technology and knowledge-based sectors. It adds that work of this nature contributes much-needed research and innovation which drives productivity in competition with foreign goods.
These locations are also set to benefit from significant transport investment such as the East-West rail link and Crossrail. These connections will make it far easier for labour across the region to travel with ease for employment and business reasons - particularly important when free movement of labour from the EU is curtailed.
Irwin Mitchell’s report highlights that the difficulties expected to be faced by the automotive sector could hit the Midlands hard and the region could see a shift in migration towards London and the South. Brexit could also throw the regulation of the chemical and plastic sector into flux, which has a large base in the North East of England.
The report highlights that locations such as Leeds and Manchester are in a stronger position to adapt to the changing economic landscape following Brexit. It says that although they are vulnerable, they have a diverse and dynamic economic base. Both were in the top 10 for year-on-year job creation in Q2 2019.
It adds that while the North West and Yorkshire regions do present some important opportunities for long-term growth, much of this appears to be concentrated in cities that are already well-established. This is in contrast to the towns and cities in Southern England where economic activity has seen expansion into other cities in the area, supported by growing transport links.
It says that the UK post-Brexit will therefore want to focus on how investment can be used to encourage increased growth across the country.
Expert Opinion“The overall impacts of Brexit in the long term prove difficult to measure without clear guidelines and a deal in place.
“The UK will ultimately be responsible for managing and securing its own trade deals and though there are clear opportunities, these will have to be balanced alongside the short term risks which will be realised shortly after the UK’s official departure.
“One thing that the last decade has taught us is that despite the hugely disruptive force of the financial crisis, the UK economy has been incredibly resilient. It is vital that the challenges we now face are tackled head on and that new opportunities that emerge are also taken advantage of. The UK is a global powerhouse and we need to stay positive and work together to ensure this remains to be the case.”
Victoria Brackett - CEO of Business Legal Services & Partner
Josie Dent, Economist at Cebr said “while the report shows that many cities will face challenges in the aftermath of Britain’s departure from the EU at the end of March, there are also opportunities, especially for cities which are willing to adapt.”
Cebr’s forecasts are based on the assumption that the UK and the EU are able to form a compromise and sign a partial free trade agreement (FTA) covering at least the most important goods traded. It is unlikely that such an FTA can be agreed on in time, before the UK needs to leave the EU in 2019. We therefore assume that a transitional arrangement will be put in place that allows a continuation of the current relationship without any major disruptions until an FTA is agreed on around 2021. On the immigration policy, we rely on the lower immigration population estimates assuming that a visa system will be implemented for EU nationals, but that the requirements (e.g. the minimum salary, the NHS surcharge payment, the application fees etc.) would be more relaxed than they currently are for non-EU nationals requiring a visa.