VOTE Leave cities across the UK could be hit hardest by an unfavourable Brexit deal.
That’s the conclusion of a new study into the impact the divorce from the EU will have on economies outside London.
The ‘be careful what you wish for’ report, published by think tank Centre for Cities and supported by the City of London Corporation, says regional cities “stand to lose most” if the UK’s financial services sector is negatively impacted by Brexit.
The recent Brexit white paper, which proposes a partnership favouring goods over services, was blasted as a “real blow” to an industry which makes up 80% of the UK economy.
And in a bid to demonstrate the City is not acting in selfish fashion – some considered the final 52-48 per cent vote to be a protest against insular industries – the local authority has thrown its weight behind this latest set of data.
The study finds that cities such as Cardiff (81%), Northampton (76%), Leeds (71%) and Edinburgh (69%) rely heavily on finance as their major services exporter.
Comparatively, the financial sector makes up 41% of London’s entire services exports, though as a much larger city the consequences could be substantially greater.
Financial services accounted for at least a quarter of total exports in nine of the 63 cities evaluated, including Ipswich (25%), Bristol (26%), and Swindon (34%).
Of those most reliant on financial services exports, more than half voted Leave in 2016’s referendum, including Northampton, Ipswich and Swindon.
City Corporation policy chairman Catherine McGuinness, who has been vociferous in her recent assessments of government’s handling of negotiations, says the knock on effects of a crunch in the Capital must not be overlooked.
Best estimates put the number of employees in the sector at 1.1million, and two out of three of these are based outside London.
“The UK’s financial services sector is often associated with London’s iconic skyscrapers, but its reach extends well beyond the Square Mile’s borders,” said Ms McGuinness.
“This data makes clear that some of the UK’s major cities rely heavily on financial services, and that a detrimental Brexit deal for the UK’s financial sector will be felt nationwide – not just in the Capital.”
As it stands, more than a third (36%) of all UK financial services exports go to the EU, followed by the US (21%) and Japan (6%).
And to further strengthen the City’s case for preserving its preferential arrangement with the EU, the report finds that the average productivity of those working in the financial sector is almost double that of the national average (£58,888), ranked at £114,678 in 2016.
Centre for Cities chief executive, Andrew Carter, said “a bad Brexit deal for services will be a bad deal for many cities too”, and added that while London may well recover from any setback, other cities may not be so fortunate.
He said: “London is well-placed to bounce back from any post-Brexit downturn thanks to its vast labour-market and business base.
“However, the worry is that many other cities – especially those outside the Greater South East – will struggle to adapt to the potential shocks that might lie ahead.
“The government has outlined its plans to take services out of the EU single market. It should not underestimate the damaging impact that this could have on jobs and wages in cities across the UK.”
Main image George Hoden (Creative Commons).