Extra investment will not compensate for new trade barriers with Europeby John Springford / January 22, 2020 / Leave a comment
In September, Boris Johnson told cabinet colleagues that he was “basically a Brexity Hezza.” In the 1980s, Michael Heseltine led regeneration projects in London and Liverpool’s docklands, and Johnson will now try to revive poorer areas with more government investment after former Labour voters “lent” him the votes that secured his election victory. But Heseltine is famously Europhile—and Johnson will discover that he can’t be Hezza and Brexity at the same time.
Poorer regions are likely to be hit hardest by Brexit. Manufacturing, the food and drinks industry, and goods distribution make up a sizeable chunk of these regions’ economies, and they export more of their output to Europe than London and the southeast. Global manufacturing companies are always on the look-out for places where land prices and wages are comparatively low, labour is plentiful, and where they can get their goods to market. Before Brexit, the UK’s regions outside the southeast had served them reasonably well, but now big manufacturers will wind down UK operations. This will have a knock-on effect on the local economy: good jobs will be lost on the shop floors, but also in components, maintenance, cleaning and other services that big manufacturing plants buy in locally.
Of the 54 seats that the Conservatives gained from Labour, 42 have more manufacturing jobs than the average UK constituency, and 22 of those seats have more than twice the national average. While voters in these seats may refuse to believe that Brexit is to blame for the loss of jobs, they will blame the Tories.
In contrast to manufacturing, top services companies cluster together in cities with lots of skilled workers, and these cities can cope with nasty surprises like Brexit better than regions that are dominated by fewer industries. The last ten years are a case in point: London’s economy has been growing faster than any other region since the financial crisis of 2008-9, despite the struggles of the City. Other service industries have more than made up for the decline of finance, with TV, music and film production leading the way. And London, Manchester, Bristol and the towns along the Thames valley have continued to draw in graduate workers, leaving the populations of poorer places older and less educated over time.
None of this…