Northern England should run scared from the Tories’ hard Brexit plan

With 10.2% of its GDP dependent on EU trade, the highest per capita EU funding in Britain and 35.5% of its manufacturing sector at risk were the UK to leave the EU, the statistics imply that Northern England would have been an ardent proponent of the Remain campaign. Yet the map above suggests otherwise; out of 125 counting areas in the North East only 11 voted Remain, with the Leave vote as high as 69.9% in Hartlepool.

This outcome was not just a vote against the EU; it was a vote for change. It was an outcry against austerity, against globalisation and against the decades of economic stagnation compared to their Southern counterparts in the capital who have flourished in the neo-liberal era. However the Northern Brexit fever was based on a lack of information, with the tabloid media overstating the responsibility of migrants in explaining the gulf between Northern and Southern prosperity whilst failing to explain the economic disaster that could ensue if the UK left the single market. And now, the North may pay a particularly heavy price.

The impact on the Northern regions is dependent on the content of the final Brexit deal, yet one fact is astonishingly clear – much opposed to the views of many of its voters, a closer relationship with the EU will be best for the North. Leaked government analysis suggested that the North East could lose 3% of its GDP under a Norway-style deal but up to 16% were Brexit to entail trading under WTO rules. Whilst the Brexiteers will rightfully rally around the fact that the claims of an imminent recession failed to materialise and so these figures should also be ignored, it is not the numbers that are important; on analysis of the Northern economy it is evident that it is far more dependent on the EU than the South – and thus regardless of the actual figures, a hard Brexit will be far more detrimental to the North than an inclusive trade deal.

The North East is the only UK region with a trade surplus with the EU, and unlike London’s global trading base, most Northern exports are shipped across the Channel. 160,000 jobs are directly linked to EU trade, largely in the manufacturing sector as with the Nissan car plant in Sunderland. An exit from the Customs Union would increase tariffs on Northern exports – raising the price for EU consumers, reducing the profits of manufacturers and encouraging relocation to the Continent to maximise sales. And despite the emphatic bellowing of Brexiteers that Brexit will free us from the shackles of the Common External Tariff to open our trade to the world, the CET is the only mechanism protecting North Eastern trade with the EU from low cost competitors in Asia, hungry to enter the lucrative European market – and so by the laws of trade, British manufacturing would be unlikely to compete outside of the continent anyway. Tariffs also raise import prices, which together with the inflationary effect of the depreciation of the pound, will squeeze stagnant real incomes in the long term. Declines in the purchasing power of workers’ wages and unemployment benefits will increase poverty rates and decrease tax revenues, necessitating further government cuts to public services that make the vision of a Northern Powerhouse an ever more distant reality.

Yet it is not just trade that creates an inexorable link between the North and its continental counterparts – the North is also a net receiver of EU capital. The £350mn a week to spend on the NHS, as championed by the UKIP parades that struck the heart of the Northern citizens who have overseen tumultuous cuts to public services under the Osborne era, pales in comparison to the inflows from the EU. Gone will be the £8.5bn, 7 year programme by the Regional Development Fund to reduce regional inequality in addition to £260mn yearly funding for North Eastern charities – and whilst the government has pledged to continue such funding, its long term commitment is uncertain. Structural funds are provided to Cumbria, Merseyside and South Yorkshire, with incomes between 75%-90% of the EU average, allocated to employment agencies and startup support to reduce the Northern structural unemployment that has failed to be addressed by the domestic government since deindustrialisation in the Thatcher era. These funds have created 70,000 jobs in Northern England since 2007 from University of Sheffield Research – sufficient proof that the EU is providing the North what the budget-constrained government cannot. This funding has been a lifeline to prevent London from sliding further ahead of Northern stagnation; against the lobbying power of the capital’s financial powerhouses, continuation of Northern funding will likely be the first to be axed if Brexit induces further pressure on the fiscal budget.

The past 30 years have seen spectacular prosperity gains in the Southern regions that have adapted to the globalised, neoliberal world economic order whilst the Northern manufacturing heartlands have slid further into stagnation. And whilst the Brexit vote was symbolic as a cry for inclusivity, Brexit will not be dictated by North-Eastern factories. Its dependence on EU trade and funding compared to more prosperous parts of Britain will not be subsidised by a budget-constrained government; the 58% of the North-East who voted Leave on the false assumption that border controls was the solution to their stagnation failed to account for the controls on goods, funding, and ultimately, their livelihoods. The economic woes of Northern public services since 2008 and its structural unemployment since de-industrialisation and plain to see, yet Brexit will not change this. The Brexit vote appears a grave mistake for the dream of a Northern Powerhouse; only a Soft Brexit can stop this vision from slipping ever further away from reality.

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Craig Stock

Second Year Economics Undergraduate at Warwick University.

Craig Stock has 15 posts and counting. See all posts by Craig Stock

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