Deprived regions to suffer 'double whammy' in no-deal Brexit

Analysis from manufacturing trade body Make UK and business advisory firm BDO has found that the most deprived areas in the UK will the worst affected by no-deal Brexit.

Areas more exposed to the European Union, with a particular concentration of manufacturing, would suffer a double whammy hit in the event of a hard Brexit, it said.

The report said that those regions with a high dependence on exports to the EU were already suffering losses, and were most likely to be at risk from a no-deal Brexit, which would present significant barriers to trade and tariffs.

According to the analysis, Wales had a "very high" exposure the rest of the EU at almost two-thirds of its trade, followed by the North East, and Yorkshire and the Humber, both at 60%.

Combined, the contribution of manufacturing to the economy overall in Wales and the North East was said to be well above average, at 17.5% and 15.2% respectively, meaning the risks of no deal were likely to be felt disproportionately by those areas.

It was also the first time that analysis showed a clear link between regional performance, exposure to industry sectors such as electronics, and global trends of investment in robotics and artificial intelligence.

London and the South East was the best performing region in the last year, as it enjoyed significant exposure to the electronics sector, and benefited from increasing global trends towards investment in technologies such as robotics and artificial intelligence.

The North West, which remained the biggest region in terms of output, was itself involved in important sectors such as automotive, aerospace and pharmaceuticals.

"Policymakers need to be on high alert to deal with the fallout from this to ensure manufacturers do not suffer collateral impact as a result," said Make UK chief executive officer Stephen Phipson.

"This underlines why we strongly support calls for the government to agree a deal with the EU which protects and supports British manufacturers."

Tom Lawton, Head of Manufacturing at BDO added that long term uncertainties around Brexit, minimal progress on the government’s industrial strategy, technological disruption, skills shortages and heightened global competition were all taking a toll on the performance of manufacturers across the UK.