Impact of a 'no deal' Brexit across the UK

This analysis was produced in 2019, before the COVID-19 pandemic. Therefore, this overview does not necessarily reflect the impact of the pandemic and the fact that the UK will now be entering into a new relationship with the EU in January 2021 under very different economic circumstances.

UK businesses are dealing with significant levels of political turmoil and feel that no deal is hurtling closer. The impacts of a no deal are vast and will impact every region and nation of the UK. From the South West of England, to the North East of Scotland, businesses are telling us a no deal would be a disaster for the UK economy, for businesses and for individual livelihoods.

What businesses are saying about a "no deal" Brexit

East Midlands

"The thought of a 'no deal' Brexit sends shivers through business and would be the most reckless decision I have seen in my forty years of work. We need certainty of the rules to enable confidence and cash flow – a 'no deal' does the opposite of this and would severely impact the fortunes of our firm and the firms we deal with in the supply chain. Representing a business with a growing team of over 200, delivering services in over 50 countries worldwide, a 'no deal' Brexit is currently the biggest threat to our business”

Software company based in the East Midlands

"As a large hardware manufacturer - with 500 employees across the UK and supplying over 3,000 retail and distribution partners - we may be unable to provide pay rises to staff in 2019 because of increased costs and reduced working capital under a no deal Brexit. We manufacture and import a significant number of products from Central & Eastern Europe and expected additional checks and delays at the border have led us to extend our delivery times from 2 days to 5+ days, resulting in us hiring double the number of drivers given legal requirements for rest stops. This has also forced us to purchase additional warehousing space to stockpile goods, which will result in a significant proportion of the our capital being tied up in unsold stock."

Large hardware manufacturer

"As Europe's leading distributor of paper and packaging solutions based in the heart of the East Midlands region - employing over 1000 people – we are doing our level best to prepare for each Brexit eventuality. This has included upgrading our warehousing capacity, analysing our supply chain and mapping our products against WTO tariffs. However the implications of a 'no deal' Brexit for our business would impact our ability to grow as a key employer in the East Midland’s region. While WTO tariffs on most paper products in a no deal scenario are likely to be small, the notable exception is tariffs of around 6% for some plastics and polymers which represents over £22 million turnover of our business. The potential for rising production costs in the event of no deal, coupled with confusion and delays at the border, all have to be factored in to our planning which is costly and diverting time and resources from growing our business in the region."

David Hunter, MD, Antalis

"As the largest provider of affordable housing in the East Midlands region, employing over 11000 people across 45 local authority areas, a 'no deal' Brexit would adversely affect our ability to provide affordable houses for the local communities in which we operate. Our business relies on capital to fund growth. Should funding options significantly reduce in a no deal scenario, our development plans will be severely impacted which will have direct implications for people in housing need who require affordable rented or shared ownership accommodation."

Chan Kataria, CEO, EMH Group

"Freshcut Foods is a £30m turnover fresh produce business that employs 280 people and supplies many of our favourite retailers and sandwich shops. Most of our raw materials are imported from the EU and have very short shelf lives. At no part of the supply chain - from grower to retailer- can more than a day or two’s stock be held. In a no deal scenario, a delay of as little as 12 hours -coupled with lorry tailbacks at crucial ports - would adversely affect our ability to maintain full continuity of supply."

David Bondi, MD, Freshcut Foods

East of England

"Our business is labour intensive and cash intensive and dependent on public sector finances and private investor confidence. In the event of a no-deal Brexit, and/or a protracted period of uncertainty, our strategy would be to exercise extreme caution about tendering for projects and to consider scaling back our operations should the market dip. This would mean a halt on any new recruitment and potential lay-offs. If our business had to scale back its operations, there would be a significant impact on our supply chain as there are roughly nine people in the supply chain employed for every one person in our company involved in a project."

A large UK-wide building and property services company

"A 'no deal' Brexit would be catastrophic: it would severely impact Ford’s operations in the UK and across Europe. We expect that a ‘no-deal’ scenario would result in a high degree of border friction, a deteriorating economic outlook, likely further Sterling devaluation, and the introduction of WTO tariffs. Ford is already committing resources initiating plans to try and minimise disruption to our just-in-time manufacturing and vehicle sales. This includes- but is not limited to- protecting vehicle and parts supply in the short-term and increasing customs resources, but it is impossible to guarantee that we can mitigate against every eventuality and unintended consequence resulting from a no-deal Brexit."

Ford

“A No Deal Brexit would severely impact our housebuilding business. Given most of our supplies come from Europe, tariffs and delays at the border could lead to us to suspend operations almost overnight. This, coupled with the severe downturn in confidence in the wider economy, could put this 50+ year company out of business, leading to local job losses and less taxes to the exchequer to pay for our vital public services.”

Robert Parker, CEO, Beechwood Homes

“We employ around 600 people and serve around 3,000 customers and distributors in the U.K. The impact of no deal would be enormous. We are large importers of wine from around the EU and two of our top three export markets are EU partners. We suffered a severe foreign exchange shock when the currency fell following the 2016 referendum and we are now faced with finding additional warehousing, increasing our costs significantly, to ensure we can maintain continuity of supply to our customers. Parliamentarians need to think long and hard about the way they are treating businesses that pay their taxes. They should not play fast and loose with communities and businesses who provide meaningful employment’.

One of the UK’s leading mid-sized brewers

London

"We operate a highly integrated supply chain, importing hundreds of thousands of raw materials, components and finished goods from the EU every year, as well as exporting tens of thousands of finished products. Despite all of the contingency planning and measures we have put in place to ensure customs documentation and arrangements are fully in place by March 29th, there remains a concern about border delays disrupting both our imports and exports of goods. We can accommodate some delays on standard items, but many of our goods are manufactured to order and more susceptible to delay."

Global engineering company with overseas HQ

“We import all of our salad from a country inside the EU due to a lack of availability in the UK. This food has a shelf life of five days - it cannot be frozen or stored for any longer. In the event of a 'no deal' exit from the EU, this supply chain would be broken. This would mean that the 50% of our products which use salad would no longer be made in the same way, or perhaps even available to buy in the UK – impacting both the service we’re able to offer our customers, and our profitability as a business”

Major national fast-food retailer

"On day one of a "no deal" Brexit we would expect to see delays beginning on imported goods from the EU, an increase in cost of supplies from the EU. We would have concerns over how this would impact our supply chain, because we have no visibility over the supply chain’s exposure to EU goods. We would expect to see diminishing labour resources due to confusion about hiring EU workers, which would play a big part in an overall increase in recruitment costs due to a shift in supply and demand."

Large infrastructure business

North East

"We are a German-owned manufacturer of high-quality plastic materials, employing more than 320 people in the North East. Over the past decade we have seen our business grow thanks in no small part to our exports to Europe. The tariffs and trade barriers that would come with a No Deal Brexit would mean that we would, as a business, have to focus more on the UK market. This would reduce our turnover and could possibly lead to local job losses. Something that nobody wants and we would do everything to avoid but it could sadly be a reality of our business."

Dave Hall, Chief Executive Officer, Renolit

"As a global leader in the manufacturing of medical and safety products, Draeger currently imports supplies from Europe on a daily basis, with as little as 24hrs notice. In the early stages under a no deal Brexit, this process could take six weeks, severely affecting our operations and our ability to service our customers, including the NHS. In the longer term, without trade agreements similar to those as favourable as the current trading arrangements with Europe, a no deal Brexit will ultimately impact our ability to grow as a key employer in the North East of England."

Mike Norris, Managing Director, Draeger UK

"As a recruitment consultancy in the North East, we’re often at the “coal face” when it comes to what’s happening in the jobs market. There’s no doubt that, in a 'no deal' scenario, local firms will require the best leadership and management teams to help navigate what could be a tumultuous environment. This would require companies shifting resources and talent that could otherwise be spent on serving customers, growing the business and creating new jobs."

Chris Stappard, Managing Director, Edward Reed recruitment

North West

"We rely heavily on EU suppliers for our raw materials, and EU customers form a large part of our business. We have competitors in the EU, and it is critical we can remain competitive on no worse than level terms post-Brexit. If not, we simply play into the hands of our European competitors. A 'no deal' scenario leaves uncertainties in our ability to trade from the UK competitively. Without frictionless, tariff free trade and a consistent regulatory framework, it is difficult to see what advantages there are to manufacture in the UK."

SME manufacturer of speciality chemicals from the North West

“Crashing out of the EU with 'no deal' could be potentially very negative for our business and industry. On top of the assumed drop in consumer confidence which would immediately harm a retail business like ours, any delays at ports would increase reliance on airfreighting stock, resulting in a large increase in costs and a reduction in our margins and ability to reinvest. These factors, alongside an anticipated increase in tariffs on imports and exports to and from the EU and a further devaluation in sterling, would reduce our ability to sustainably grow our business and create more jobs in our region."

Retailer based in the North West of the UK

"As a family run manufacturer of raw materials to the ceramics industry, we rely on our EU-based customers for a large portion of our revenue. The Brexit uncertainty has already led to European customers seeking alternative suppliers, and a "no deal" Brexit will undoubtedly lead to other customers taking their business elsewhere. This will have a large impact on our business and other businesses in the industry, up and down the supply chain, and could severely harm the ceramics industry indefinitely."

Alan Ault, Managing Director, Valentine Clays Ltd.

"As an SME importing goods to and from the EU, and wider, we would be severely impacted under a “no deal” Brexit. We would suffer greatly from the increase in paperwork and associated complications, meaning we would have to set up a company in mainland Europe to handle all of our EU business – about a third of the total. This means another EU country would benefit from the taxes we currently pay on this part of our business – reducing our contribution to the public services we all rely on and treasure."

SME chemicals distributor

Northern Ireland

"Bombardier has been advocating for an orderly Brexit. This continued uncertainty, and the real prospect of leaving the EU with no deal, does not help with business planning. It is imperative that Parliament finds a resolution that works for UK business."

Bombardier

"As we draw ever closer to the Brexit deadline in 2019, it’s key to put on record once again, the essential role the agri-food industry plays in this region of the UK, not only in bringing great food to market, but supporting and driving economic growth whilst being environmentally responsible. Divergence in standards, changes at customs and uncertainty over tariffs and quotas are all likely to impact significantly on our outputs from farm through to fork and those of our business partners. Given the industry’s reliance on labour, our spread of customers in the UK and globally, any disruption to our business will inevitably add cost and put additional strain into our supply chain, especially around delivery of our fresh product

Moy Park

"If there are going to be tariff barriers, then why would we continue to manufacture sheds for the European market in the UK, in Northern Ireland, when there’s other manufacturing space in mainland Europe?"

Yardmaster

Scotland

"As a specialist goods manufacturer we estimate an £8 million hit in the first 12 months of a no deal Brexit as customers ask the firm to absorb increased tariffs of 5% on our products under WTO terms. This figure excludes additional administration and stockpiling costs. In the longer-term the company has serious concerns that if the UK becomes a more difficult or expensive place to procure goods from, our rivals in Germany, Italy, Austria and Sweden will all have a competitive advantage over us, regardless of a competitive sterling exchange rate."

Specialist goods manufacturer

"Like most businesses the uncertainty of what no deal will actually mean, combined with no time to be able to adjust to any new arrangements, is a key concern and risk. Although we have a relatively small exposure to Europe it is still an important market to us and one in which we are investing in to grow. Therefore, anything that makes trade more difficult, whether it be trade barriers or additional documentation requirements, would be a concern - particularly in a no deal situation where there is no true understanding as to what this will mean in practice. Perhaps most importantly for us is that we source components globally and export more than 90% of our products, and therefore we rely on being able to move products smoothly all over the world. A concern to us is that "no deal" will create significant issues within the supply chain / logistics network leading to delays which impact all trade, not just goods going to and from Europe, and as a consequence will potentially severely constrain the ability for us to service our global customer base."

The CEO, A Medtech Company

"For some months now the uncertinty around the UKs departure from the EU has resulted in a lack of confidence around our own business investment plans and more importantly to our customers when buying one of our new homes. Like most businesses the prospect of leaving the EU with no-deal is unamaginal. Not because we are able to predict the likely impact better than anyone else. Put simply; a wait and see strategy will most likely engulf decisions, from business investment to individual purchases, invoking a national pause on activity. Making the resulting impact on our economy easy to predict."

Ed Monaghan, CEO, MacTaggart and Mickel

South East

"As an SME in the services sector, my business depends almost entirely on a certain economic environment and confidence in the market. If the UK were to crash out of the EU with 'no deal', the uncertainty that this would bring, with businesses holding back on investment decisions, could severely hamper our revenue and growth for the foreseeable future."

Phil Cousins, Director, Cousins Executive Coaching Ltd

"Although there could be a number of instant damaging impacts of a 'no deal' Brexit, Mott MacDonald would have more concerns about some of the longer-term consequences. This would include, but is not limited to; wider economic uncertainty leading to postponed or cancelled investment decisions from UK clients, currency fluctuations leading to potential losses on fixed exchange rate contracts, reduced access to highly skilled specialists, and the re-deployment of internal resources to dealing with the impact that could overwise be spent on growing the business and creating new jobs."

Mott Macdonald Group

"AJ Wells & Sons Ltd are a wood burning stove manufacturer, employing around 150 people on the Isle of Wight. Around 90% of the materials used are produced in the UK, but there are some key materials which we import from the EU, including ceramic glass for the stoves. In the case of a no-deal, we would be severely impacted if it was difficult to get these raw materials though customs in a timely manner - we could build 90% of a stove, but a customer will not accept a wood burner without glass! It is no exaggeration to say that this would stop the majority of our sales overnight. Unfortunately and unfairly, the major effects will not be felt by us as business owners, but will be felt by some of our lower paid employees who would be most vulnerable to job losses if we cannot make and sell our products."

Hugh Wells, Managing Director, AJ Wells & Sons Ltd

South West

“Shiner is one of Europe’s leading skateboard and skateboard clothing distributors. A “No Deal” Brexit would have a hugely detrimental impact on us – leading to increased costs, reduced revenue and job losses. Overnight, export tariffs of nearly 17% would apply to our footwear, alongside tariffs of 12% on our clothing: both hugely damaging given we sell half of our products to the EU. As a result, Shiner would immediately have to transfer our footwear and clothing to a European warehouse, resulting in a reduction of the 40 people we currently employ in our warehouse in Bristol, and costing us hundreds of thousands of pounds a year – money that should otherwise be spent on growing our business and serving our customers.”

Charlie Allen, Managing Director, Shiner

"A No Deal scenario threatens Airbus’ future presence in the United Kingdom. While a No Deal scenario may not see the re-consideration of investments happen overnight, future investments would without doubt be at stake. Airbus’ integrated supply chain operates on a just-in-time basis that requires frictionless cross-Channel trade, meaning sudden changes in customs procedures, logistics and environmental standards would have major industrial and cost impacts. This would severely undermine the UK’s efforts to keep a competitive and innovative aerospace industry. As a direct employer of over 14,000 people in the UK, and an indirect supporter of 100,000 jobs through the supply chain, Airbus cannot sit by as the threat of a No Deal Brexit becomes a reality."

Katherine Bennett, Senior Vice President, Airbus

"Midas is one of the largest independent construction and property services providers in southwest England. While we have delivered growth and a solid performance across the board during 2018, the prospect of a no deal Brexit weighs heavy on our minds. If the UK falls off a cliff without a deal it would be disastrous for inward investment. This situation could trigger a significant construction downturn putting local jobs at risk and vital construction projects on hold."

Steve Hindley, Chairman, Midas Group

Wales

"A 'no deal' Brexit would be catastrophic: it would severely impact Ford’s operations in the UK and across Europe. We expect that a ‘no-deal’ scenario would result in a high degree of border friction, a deteriorating economic outlook, likely further Sterling devaluation, and the introduction of WTO tariffs. Ford is already committing resources initiating plans to try and minimise disruption to our just-in-time manufacturing and vehicle sales. This includes- but is not limited to- protecting vehicle and parts supply in the short-term and increasing customs resources, but it is impossible to guarantee that we can mitigate against every eventuality and unintended consequence resulting from a no-deal Brexit."

Ford

"A no deal Brexit would represent a major concern for us at Radnor Hills. We are particularly worried about our just in time supply chains for ingredients and resins. We have little option to increase stock holding and therefore this is not a realistic option. We are also worried about the implications to being able to access casual labour upon which our business relies. The value of Sterling has been depressed for so long now due to Brexit uncertainties that our profits have been severely affected due to the high price of inputs that we buy from Europe. This has also affected our investment decisions as almost all the machinery we buy is made in Europe."

William Watkins, Managing Director, Radnor Hills

“As a small company it is difficult to prepare for a hard Brexit as one simply does not have the size or scale to be able to make alternative plans. The only real planning one can do for a hard Brexit is to move some or all of one’s operations to another EU country. This is simply not an option for most small businesses. We operate in a highly competitive market and one is simply kidding oneself if you believe our EU customers will continue buying from us if there is any sort of customs procedure required - restricting out company’s potential to grow in the future.”

An SME supplying the hospitality industry

West Midlands

"As a business that provides home moving services, a third of our income comes from relocations to and from Europe. Any delays at ports, which would be inevitable under a 'no deal' Brexit, would severely impact this side of the business and would put at risk the jobs of some of the 190 people we employ. Coupled with this, the wider economic uncertainty that comes with a 'no deal' Brexit will undoubtedly have a knock-on effect on the housing market, reducing our revenue streams."

Rob Bartup, Managing Director, G.B. Liners Ltd

“A 'no deal' Brexit would be a disaster for the higher education sector – both in terms of “measurable” things like support for research and innovation, the Erasmus Programme and our reliance on personnel from the EU, but also the reputational damage that it is likely to do to us as a country. The UK Higher Education sector has an international reputation for honesty, quality and integrity. “No deal” - where we as a country renege on previously agreed commitments - diminishes this hard-earned reputation, making us look more inward-looking and more parochial. As we look to promote the Higher Education sector abroad, this is not the way we should be presenting ourselves.”

Nigel Driffield, Professor of International Business, Warwick University

Yorkshire and the Humber

"We are a specialist paint manufacturing business, based in Hull. Our main export market place, and our main target area for future growth, is Europe. In a no deal situation, we will have to open a trading company in Europe to remain competitive. This will mean diverting resources from the UK business, which will undoubtedly effect the size and growth of our 100-year old business."

Geoff Mackrill, Managing Director, Teal & Mackrill Ltd.

"Even as a construction company which is completely UK-focused, Henry Boot would have two overriding concerns about a 'no deal' Brexit. The first regards our supply chain and skilled labour; we rely on both from the EU so any delays at borders or tariffs which stem from a 'no deal' will increase costs. The second is economic uncertainty: a 'no deal' Brexit and likely economic downturn could mean our customers hold off on investment decisions. Both of these concerns could hamper our ability to grow as a business, and our ability to create more jobs in Yorkshire."

John Sutcliffe, CEO, Henry Boot PLC

"As one of the largest food producers in Britain, we import a wide selection of food and supplies from Europe. For example, nearly a quarter of our pork comes from the EU, which would be subject to various degrees of import tariffs in a 'no deal' Brexit. As an importer of other food products from across Europe – from olives to cheese – these tariffs would impact our business on both an administration and cost level, increasing our costs and potentially pushing up our prices for customers."

A leading UK food producer

The economy at a glance

East Midlands

• If the UK leaves the EU without a deal, real GVA in the East Midlands – a measure of the value of goods and services produced in the region - could be 8.5% lower by 2034, compared to if the EU-UK relationship remained the same. Relative to the rest of the UK, the East Midlands would fare worse in a no deal scenario. This could amount to an annual loss of output of £12 billion by 2034 (in today’s prices). This is more than the value of annual public spending on health services in the region, including all hospitals, GP surgeries and emergency health services.
• Leicester, Rutland and Northamptonshire are some of the most exposed areas to Brexit, with 15.4% of GDP exposed, while exposure in Derbyshire & Nottinghamshire and Lincolnshire is also high relative to the south. Businesses in these areas may find it more difficult to grow and in turn invest less back into the regional economy and create fewer jobs. Securing a deal with the EU is incredibly important for people in this region.
• The manufacturing industry is important to the East Midlands, and many of the region’s manufacturing businesses are particularly exposed to the risk of rising tariffs and other trade costs in the event of no deal. The manufacturing businesses operating in the region account for 16.5% of the East Midlands’ GVA, making it the region’s largest sector. This sector also employs 12.4% of the region, meaning that any economic impact could be felt in the form of jobs either being lost or not created in the first place.
• Goods account for 86% of the East Midlands’ exports, and over half of these go to the EU. A significant proportion of businesses are therefore generating revenue from exports, including everything from car manufacturers to technology start-ups, and would be heavily impacted in the event of a no deal exit from the EU as trade becomes more difficult.
• The largest part of the manufacturing sector in the East Midlands is agri-food, which accounts for 21.9% of manufacturing GVA. At a national level, the food and drink sector is likely to see a negative impact in a no deal scenario, with sectoral GVA projected to be roughly 11% lower after 15 years than it would be if today’s arrangements persisted. This is because agri-food firms would face very high tariffs when trading with the EU on products such as milk and chocolate, with an average additional fee of 22%. This is as well as additional inspections that may require even more administration. All of these factors add costs for businesses.

East of England

• With a diverse economy, the East of England would be significantly affected if the UK were to leave the EU without a deal. Real GVA in the East of England, a measure of value of goods and services produced in the region, could be 8.4% lower by 2034 if the UK fails to secure a deal, compared with if things stayed the same. This is above the UK average. This could amount to an annual loss of output of £17 billion after 15 years, double the amount of public spending on education in the region each year, including all schools and colleges.
• Manufacturing accounts for a significant amount of the East of England’s GVA. It is the third largest sector in the region behind real estate and distribution, and many of these manufacturers export. Goods account for 80% of the East of England’s exports, with 53% of these going to the EU, making a deal vital.
• The East of England has one of the most diverse manufacturing sectors of any UK region, with world beating companies in pharmaceuticals, computers & electronics, machinery & equipment, along with agri-food. Despite this strength, leaving the EU without a deal would seriously hamper the ability of these businesses to continue trading abroad, or buying the vital supplies they need from other firms inside the EU.
• High tariffs and new customs procedures are a key concern for the agri-food sector in the East of England. After Scotland, the region boasts the second largest agriculture sector in the UK (16.6%). At a national level, the food and drink sector is likely to see a negative impact in a “no deal” scenario, with sectoral GVA projected to be roughly 11% lower in 15 years’ time than it would be if today’s arrangements persisted. This is because agri-food firms would face very high tariffs when trading with the EU on products, such as milk and chocolate, as well as additional inspections that require even more paperwork. All of these factors add additional costs for businesses.
• The professional, scientific & technical activities and administrative & support service activities sectors each make up nearly 10% of the East of England’s employment. No deal could put these jobs at risk due to the additional trade costs, equivalent to about 6% of GVA, that would come into force in the event of no deal.
• A lot of these costs in a no deal scenario would come from increased restrictions on the ability for people to move around Europe on businesses, whether on secondments, training, or carrying out contract negotiations. These are serious issues that would affect business across the country if the UK left the EU without a deal.

London

• If the UK failed to secure a deal this would have serious implications for London’s economy, which relies heavily on frictionless access to the EU market. Real GVA in London could be 6% lower by 2034 in a no deal scenario compared with the UK’s current trading relationship. This could amount to an annual loss of output worth £40 billion by 2034 (in today’s prices), nearly five times annual public spending on London’s transport network and 13 times annual public spending on policing in the capital.
• The service sectors are very important to London, and many of the capital’s services businesses are particularly concerned about increases in non-tariff barriers arising from a no deal scenario, such as the loss of passporting in financial services and mutual recognition of qualifications for professional services, which helps lawyers and accountants for example to supply their services to other centres.
• Barriers to trade with the EU in a no deal scenario would weaken the capital’s competitiveness, especially in services which account for roughly 58% of London’s exports, 37% of which go to the EU. Information and communication services account for 40% of London’s services exports to the EU along with real estate, professional, scientific and technical services at 33%.
• Financial services rely on simple access to the EU to deliver important products and services to EU clients and customers, from pensions to insurance. An increase in trade barriers to the EU arising from the loss of passporting, restrictions on temporary travel for business purposes and restrictions on the exchange of personal data are particular concerns to the financial sector. In a no deal scenario the sector’s national GVA is projected to be roughly 9% lower by 2034 than it would be if the UK benefited from the same trading relationship as today.
• Higher trade barriers for the professional, scientific and technical services sector in a no deal scenario are also likely to effect London’s economy, notably including restrictions on the temporary mobility of people for business purposes, such as people travelling for secondments and training, restrictions on investment and cross-border services activity and restrictions on the exchange of personal data. At the national level, GVA in business services is projected to be roughly 6% lower by 2034 than it would if today’s arrangements continued.

North East

• The North East could be among the regions most exposed to the economic fall-out from leaving with the EU without a deal. If the UK fails to secure a deal, by 2034 real GVA – a measure of the value of goods and services produced in the region - could be 10.5% lower in the North East than under the UK’s current arrangements with the EU. This could amount to an annual loss of output worth £7 billion by 2034 (in today’s prices), equivalent to twice the amount of public spending on schools and education in the region each year.
• Manufacturing is very important to the North East, and many of the region’s manufacturing businesses are particularly exposed to the risk of higher tariffs and other trade costs that would hit firms in a no deal scenario. The manufacturing sector accounts for 15% of the North East’s GVA and 10.4% of employment, making it the region’s largest sector. With 89% of the North East’s exports being goods, and with 59% of these going to the EU, a deal is really important for jobs and growth in the North East.
• The prospect of higher tariffs, border delays and administrative costs are a particular risk for the North East’s automotive sector – which spans small technology companies making steering systems to one of the largest car companies in the world. Transport equipment makes up the greatest share of manufacturing GVA in the North East (15.0%), and 94% of this comes from motor vehicles. At a national level, the automotive sector is likely to be one of the most severely impacted sectors in a no deal scenario, with sectoral GVA projected to be around 23% lower by 2034 than it would be if today’s arrangements persisted.That is because tariffs on cars could be up to 10% and every completed component in a car would have to be tested twice over before being sold, costing hundreds of thousands of pounds.
• The North East’s important chemicals, refined petroleum and coke sector, which accounts for 13.7% of the region’s manufacturing GVA, is also highly exposed to no deal. The chemicals, pharmaceuticals, rubber & plastics sector is set to be one of the hardest hit sectors in a no deal, with sectoral GVA estimated to be around 22% lower by 2034 than if today’s arrangements with the EU continued. That is because chemicals sold or traded to the EU are highly regulated and for safety reasons would have to be carefully tracked and traced through a complex system that UK firms would have to go through twice.

North West

• The North West could be among the regions most exposed to the economic fall-out from leaving with the EU without a deal. If the UK fails to secure a deal, by 2034 real GVA – a measure of value of goods and services produced in the region - could be 9.4% lower in the North West than under current arrangements¹. This could amount to an annual loss of output of over £20bn by 2034 (in today’s prices), more than double the amount of public funds spent each year on schools and education in the region.
• Cumbria’s exposure to Brexit is the highest in the UK, with 16.3% of regional GDP potentially at risk in a no deal Brexit. Cheshire and Lancashire also have significant exposure compared with the rest of the UK, with exposure of 14.5% and 15.0% respectively. This makes securing a deal particularly essential for employees in those vulnerable areas.
• The economy in the North West is more reliant on manufacturing than any other region in the UK, with the sector accounting for 16.2% of the North West’s GVA and 9.2% of employment. With goods accounting for 75% of the North West’s exports, and with 49% of these destined for the EU, a deal that keeps the region’s prices low and businesses competitive in the EU is important.
• The prospect of higher tariffs, border delays and administrative costs are a particular risk for the North West’s automotive sector– with businesses of all sizes producing components ranging from suspension systems to car alarms. Transport equipment makes up the greatest share of manufacturing GVA in the North West (17.5%), with motor vehicles representing 46% of this. Firms producing other transport equipment like submarines and parts for airplanes account for the remaining 54%. At a national level, the automotive sector is likely to be one of the most severely impacted sectors in a no deal scenario, with sectoral GVA projected to be around 23% lower by 2034 than it would be if today’s arrangements persisted. That is because tariffs on cars could be up to 10% and every completed component in a car would have to be tested twice over before being sold, costing hundreds of thousands of pounds.
• The North West’s important pharmaceutical and chemicals sectors, which account for 16.3% and 14.6% of the region’s manufacturing GVA respectively, are also highly exposed to a no deal scenario. Sectoral GVA in the chemicals, pharmaceuticals, rubber & plastics sector is estimated to be around 22% lower by 2034 than if today’s arrangements continued. That is because these sectors are highly regulated by the EU in order to keep people safe, and pharmaceutical and chemical companies are likely to face significant additional red tape if no deal can be agreed.

Northern Ireland

• A “no deal” scenario would have a significant impact on Northern Ireland’s economy. Real GVA in Northern Ireland, a measure of the value of goods and services produced in the region, could be 9.1% lower in 15 years if the UK fails to secure a deal compared with if everything stayed the same.1 This could amount to an annual loss of output of almost £5 billion by 2034 (in today’s prices), more than the value of public spending on hospitals, GP surgeries and other health services across Northern Ireland each year.
• The manufacturing sector is important to Northern Ireland, and many manufacturing firms in the region regard no deal as a serious concern. The manufacturing sector accounts for 13.7% of Northern Ireland’s economy, making it the region’s second largest sector, and 10.5% of employment. Around 57% of Northern Ireland’s goods exports go to the EU.
• High tariff barriers and new customs procedures are a key concern for the agri-food industry, which makes up the largest proportion of manufacturing GVA in Northern Ireland, at nearly 27%. Both small independent firms and industrial food producers employing hundreds of people make up this sector. At a national level, the food and drink sector is likely to see a negative impact in a “no deal” scenario, with UK-wide sectoral GVA projected to be roughly 11% lower by 2034 than it would be if today’s arrangements persisted. This is because agri-food firms would face very high tariffs when trading with the EU on products such as milk and chocolate, as well as additional inspections that require even more paperwork. All of these factors add additional costs for businesses.
• However, a key concern for Northern Ireland is the return of a hard border, which was not modelled in this economic analysis. This suggests that the impact on the Northern Irish economy could be greater than stated here. A no deal Brexit raises great concerns about the risk to the momentous economic, social and political progress experienced in Northern Ireland over the past two decades. Northern Irish businesses are highly dependent on Irish markets, particularly the agri-food sector mentioned above, where frictionless cross-border trade is essential. The vast majority of these firms are small and micro businesses that already operate on small margins and have very little capacity to develop and execute no deal contingency plans to, for example, diversify import and export markets. In particular, the agri-food sector relies heavily on frictionless cross-border trade: out of the 177,000 HGVs that cross the border every month, around 53% are from the agri-food sector.
• Many businesses’ main transport route to markets in London and the South East of England is via ports in Ireland. These businesses fear that their long-established transport routes to the rest of the UK will be hindered or stopped completely by a hard border. As a consequence, these markets may be rendered inaccessible or become economically inviable.
• The imposition of tariff and non-tariff barriers in a “no deal” scenario would add costs and cause significant disruption to Northern Irish businesses.

Scotland

• If the UK fails to secure a deal, real GVA in Scotland – a measure of the value of goods and services produced in the region – could be 8.1% lower by 2034, compared with a situation in which current arrangements with the EU remained in place. This could amount to an annual loss of output of over £14 billion by 2034 (in today’s prices), more than annual value of public spending on hospitals, GP surgeries and other health services across Scotland each year.
• The manufacturing sector is important to Scotland, and many manufacturing firms are particularly exposed to the risk of rising tariffs and other trade costs. Manufacturing accounts for just over 10% of Scotland’s GVA, making it the country’s second largest sector behind real estate. Goods also account for over three quarters of Scottish exports, with nearly half of these going to the EU meaning that the severe disruption at ports or extra customs burdens from a no deal scenario would have a huge impact on trade and transportation for a significant part of Scotland’s economy.
• Firms in Scotland’s important agri-food sector are particularly concerned about “no deal” because of high tariffs and new customs procedures. Scotland accounts for more of total UK agricultural production than any other region or nation. The agri-food sector makes up by far the largest proportion of manufacturing GVA in Scotland (26.1%). At a national level, the agri-food sector is likely to see a negative impact in a “no deal” scenario, with sectoral GVA projected to be roughly 11% lower by 2034 than it would be if today’s arrangements persisted. For example, the loss of access to key non-EU markets through EU trade agreements would mean that Scotch whisky - one of Scotland’s most famous exports - could face import duties of £53 million a year to access these markets.

South East

• If the government fails to secure a deal, real GVA in the South East – a measure of the value of goods and services produced in the region - could be 7.8% lower by 2034, compared to a scenario in which the UK’s maintained current arrangements with the EU. This could amount to an annual loss of output worth £28 billion by 2034 (in today’s prices), equivalent to one-and-a-half times the value of public spending on doctors, hospitals and other health services each year.
• Certain parts of the South East are more exposed to the effects of a no deal Brexit than others, in terms of local GDP at risk. Exposure in Berkshire, Bucks & Oxfordshire and Surrey East & West Sussex is relatively low compared with the rest of the UK while exposure in Hampshire and the Isle of Wight and Kent is more exposed, with 14-15% of GDP at risk.
• The South East’s services exports to the EU are concentrated in information and communication services (43%) with real estate, professional, scientific and technical services also making up a significant proportion (29%). At a national level, the business services sector is likely to see a negative impact in a “no deal” scenario, with sectoral GVA projected to be roughly 6% lower by 2034 than it would be if today’s arrangements persisted.That is because business services face a huge range of different potential barriers- from being unable to move people to being unable to transfer data. Unless a deal is struck, growth will be hampered, innovation stifled and hundreds of high value jobs in the region will be put at risk.

South West

• The South West’s economy is particularly exposed to the threat of a no deal Brexit given how highly reliant the region is on frictionless trade with the EU in key sectors such as automotive and logistics. Real GVA in the South West could be 7.6% lower by 2034 if the UK fails to secure a deal, compared with the UK’s current trading relationship. This could amount to an annual loss of output worth £13 billion by 2034 (in today’s prices), which is more than the value of annual public health spending in the region, including on doctors, hospitals and other health services.
• The importance of manufacturing in the South West means no deal could have a significant impact. Manufacturing is the region’s second largest sector, accounting for 11.1% of the South West’s GVA and 7.9% of the region’s overall employment. Jobs in manufacturing range from those at specialist food producers to those in aerospace hangers.
• Manufacturing that firms build their success on pan European supply chains are vulnerable to any disruption at the border in a no deal scenario, which would severely impact the region’s growth and jobs. Goods also account for roughly 81% of the South West’s exports, with 45% of these going to the EU.
• The aerospace and maritime sector is a large part of the South West’s manufacturing success story and the prospect of border delays and administrative costs are a particular risk for the sector’s economic prosperity. Transport equipment makes up the greatest share of manufacturing GVA in the South West (22.9%), with non-automotive sectors making up 68% of this. A no deal scenario would seriously impact the complex pan-European supply chains that are essential in a sector where the final product can consist of 300,000 components.

Wales

• Wales would be one of the areas of the UK’s most exposed to leaving the EU without a deal. Real GVA in Wales – a measure of value of goods and services produced in the region- could be 8.1% lower by 2034 compared to if things stayed the same. This could amount to an annual loss of output of almost £7 billion by 2034 (in today’s prices), which is equivalent to the value of public spending on hospitals, GP surgeries and other health services across Wales each year.
• Wales relies more on manufacturing than any other area of the UK, with the manufacturing sector accounting for 17.3% of Wales’ GVA and 10.0% of employment. Many of the firms in this sector export, with 61% of goods going to the EU. This means that avoiding no deal is critical to protect jobs and growth in these Welsh manufacturing businesses.
• The prospect of higher tariffs, border delays and administrative costs are a particular risk for the automotive sector. Transport equipment makes up the greatest share of manufacturing GVA in Wales (16.6%), with marine, car and aerospace firms all calling Wales home. At a national level, the automotive sector is likely to be one of the most severely impacted sectors in a “no deal” scenario, with sectoral GVA projected to be 23% lower in 15 years than it would be if today’s arrangements persisted. That is because tariffs on cars could be up to 10% and every completed component in a car would have to be tested twice over before being sold, costing hundreds of thousands of pounds.
• High tariffs and new customs procedures are also a key concern for the agri-food sector, which makes up a significant proportion of manufacturing GVA in Wales (14.7%). At a national level, the food and drink sector is likely to see a negative impact in a “no deal” scenario, with sectoral GVA projected to be roughly 11% lower in 15 years. This is because agri-food firms would face very high tariffs when trading with the EU on products such as milk and chocolate, as well as additional inspections that require even more paperwork. All of these factors add additional costs for businesses.

West Midlands

• A no deal scenario would have a significant impact on the West Midlands’ economy, businesses and future investment into the region. Real GVA in the West Midlands – a measure of the value of goods and services produced in region - could be nearly 10% lower in 15 years’ time compared to a scenario where things remained the same. This could amount to an annual loss of output of £18 billion by 2034, double the value of annual public spending on education in the region, including all schools and colleges.
• The manufacturing industry is important to the West Midlands and many of the region’s manufacturing businesses are particularly exposed to the risk of rising tariffs and other trade costs. The manufacturing sector alone accounts for 16% of the West Midlands’ GVA, and over 10% of employment, making it the region’s largest sector.
• Goods account for 90% of the West Midlands’ exports, and 44% of these go to the EU. This means exports to the rest of the world are very important. However, firms exporting to many of the leading non-EU countries, such as Japan, South Korea and South Africa, benefit from the EU’s existing free trade deals to do so. These deals are expected to fall away if there is no deal, damaging our trade not just with the EU, but with the rest of the world too.
• The prospect of higher tariffs, border delays and administrative costs are a particular risk for the automotive sector in the West Midlands. Transport equipment makes up the greatest share of manufacturing GVA in the region at over 35%, significantly higher than the UK average of 15%, with motor vehicles representing the greatest share of this. A no deal exit poses a significant threat to this vital industry in the West Midlands, while also hurting growth and future investment in the region as a whole.

Yorkshire and the Humber

• A no deal scenario would have a significant impact on Yorkshire and the Humber’s economy and the businesses operating in the region. If the UK fails to secure a deal, by 2034 real GVA – a measure of the value of goods and services produced in the region - could be nearly 10% lower in Yorkshire and the Humber than under current arrangements.
• In real terms, this could amount to an annual loss of output of over £12 billion by 2034, equivalent to annual public spending on health in the region, including all hospitals, GP surgeries and emergency health services.
• East Riding and North Lincolnshire has the second highest exposure to Brexit in the country, with 15.8% of GDP at risk. Exposure in other regions such as North, South and West Yorkshire is high relative to other regions, particularly in the south of England. In practical terms, this means that businesses operating in these parts of Yorkshire and the Humber may be forced to make more difficult choices and faster than those in the rest of the country. This in turn could potentially hurt future investment in skills and productivity-enhancing equipment and technology.
• Manufacturing is very important to Yorkshire and the Humber, and many of the region’s manufacturing businesses are exposed to the risk of rising tariffs and other trade costs. The manufacturing sector accounts for 14.9% of Yorkshire and the Humber’s GVA, making it the region’s largest sector, employing 10.5% of people in the region. Goods account for 87% of Yorkshire and the Humber’s exports, with 58% of these going to the EU. A no deal Brexit would hurt both the region’s and wider UK’s competitiveness, weighing on growth.
• At both a regional and national level, the food and drink sector is likely to see a negative impact in a no deal scenario, with UK-wide sectoral GVA projected to be roughly 11% lower by 2034 than it would be under current arrangements. This is because agri-food firms would face very high tariffs when trading with the EU on products such as milk and chocolate, with an average tariff of 22%. These costs are before those of additional inspections that may require even more administration.
• Higher non-tariff barriers are a big concern in the chemicals and rubber and plastic sectors, which account for 12.4% and 10.0% of Yorkshire and Humber’s manufacturing GVA respectively, higher than the UK’s average. This sector in Yorkshire and the Humber is set to be one of the hardest hit in the event of no deal, with UK-wide sectoral GVA estimated to be around 22% lower in 15 years’ time than if today’s arrangements continued.