Friday, September 27th, 2019
It’s no surprise that the businesses with the most lobbying weight to throw around have received a higher level of attention in regard to how a no-deal Brexit would impact their industries. This includes the financial sector, automobile, and aerospace firms. However, a government-leaked analysis from 2018 shows that the industries with less representation on the matter may be the hardest hit if the government is unable to reach a deal by the October 31, 2019 deadline.
Which Regions Will Brexit Hit Hardest?
In a twist of irony, the two regions that voted strongest in favor of Brexit are forecast to be hit the hardest. The government’s analysis predicts that North East England, which had an overwhelming amount of support for Brexit, will suffer the most with a 16% drop in GDP.
The West Midlands, which had the highest vote share to leave, will be hit the second hardest and have to endure a 13% blow to GDP in the event of a no-deal Brexit.
The North West region and Northern Ireland are both anticipated to experience a 12% fall in GDP.
These areas will be hit particularly hard due to their reliance on trade with the EU as compared to the rest of the UK.
It’s currently predicted that the UK as a whole will have an 8% drop in GDP if Britain exits the EU without a deal, and we’ve already seen the value of the 1£ fall in anticipation of this.
Which Industries Will Brexit Hit Hardest?
While many industries will feel the effects of a no-deal Brexit, service industries are forecast to feel the hit hardest. This includes professional, scientific, administrative, and technical services.
Wholesale trades, retail trades, and land transport services will also feel the impact of stricter border controls and regulations. Due to this, UK trucks of merchandise and goods arriving from the EU will be subjected to more extensive examinations at ports. This will most likely result in longer lines at ports, shortages of products in stores, and raised prices to offset the increased time that will be required.
Legal and accounting services, warehousing, computer programming, and activities supporting financial services will all likely feel a negative hit as well. These types of services are spread out over the wider economy and have less lobbying power to ensure their interests are met.
On the other end of the spectrum, the risk level for financial services has been calculated to be lower than most industries due to their increased globalisation and lower dependency on the EU. However, it’s still expected that as much as 8% of their GDP will be vulnerable.
The underrepresented regions and industries of the UK are predicted to be the strongest hit when facing a no-deal Brexit. These exposed markets could have a greater impact on the country as a whole if they’re risks are not considered.
No matter the industry, the risk posed to all industries in the UK is not insignificant. The most ideal outcome in the scenario of a no-deal Brexit is for industries to rapidly adjust by sourcing parts and services within the UK where they had been previously sourced from the EU.
In this case, there would still be losses, but it’s calculated that this reconfiguration could cut losses to employment and GDP by about one-third as compared to if no changes were to be made.
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