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26 April 2017

On 22 February 2017, UKTPO, CBI and the TUC held an event in Newcastle that brought together employees and employers to discuss the important regional issues for post-Brexit trade. This guest blog by Sarah Glendinning, Regional Director for the North East, CBI; and Beth Farhat, Regional Secretary, Northern TUC draws on this discussion.

Now that Brexit negotiations are officially underway it’s important to consider what kind of deal workers and businesses want from negotiations, and what kind of deal will enable all parts of the country to develop and prosper after we leave the EU.

As representatives of working people and businesses from across the North East, we are seeking a Brexit deal that ensures stability and delivers decent jobs, fair pay and growth for the region.

Trade is a key part of the North East’s economy and trade with the EU is particularly important.  Of all the regions in England, the North East is the only one to export more goods and services than it imports, with a global trade surplus of over £3.4 billion.[1] Trade with the EU has delivered at least 100,000 jobs in the region, equivalent to 8.5% of the total workforce. [2]

Image of the Angel of the North

The Angel of the North, Credit: Iain Farrell, Flickr

Any Brexit deal should extend this strong trading relationship.  It should involve as much tariff- and barrier-free access to the single market as possible and a guarantee that businesses and workers will continue to be covered by the same regulatory framework for technical, social, environmental and other standards as in other EU countries. It is important that our workers and businesses are not disadvantaged by falling below the high standards and protections set by the EU.

There would be serious consequences for the North East if the UK cannot secure a trade with the EU – the so-called ‘no deal’ outcome.  If the UK were to trade with the EU under WTO rules alone, it would mean damagingly high tariffs on certain export goods that the North East relies on for its growth.  A key example is the car industry. According to the North East Automotive Alliance, there are more than 240 automotive companies in the region, generating over £11 billion in sales and over £5 billion in exports, with a trade surplus of £2.6 billion.  The EU is the main export destination for cars made in the UK.   Trading by WTO rules means cars would face 10% tariffs in EU markets, making each car roughly £2300 more expensive.  This would render UK-made cars significantly less competitive in Europe (particularly combined with other bureaucracy and extra barriers trading by WTO rules involves), harming businesses and jobs.

To avoid the dangers of the WTO scenario, the government should ensure that that, if it has not been possible to negotiate the kind of comprehensive deal we need with the EU within the two-year timeframe given by Article 50, there will be transitional arrangements in place during which one can be negotiated.  This is needed to ensure  there is certainty and stability in our trading relationship with the EU.

We also need certainty for the EU citizens living and working in the North East who are our workmates, our employees, our friends and neighbours.  EU citizens are playing a key role working in industries and public services in the North East, as they do across the country.   TUC research reveals that there are 2,500 workers from EEA countries in health and adult social care in the North East alone – and over 145,000 nationally.  Losing these workers would do real damage to our communities, especially affecting elderly, disabled and other vulnerable people in particular need of care. That is why we are calling for the UK government to guarantee these citizens their right to remain in the UK as soon as possible – they deserve security for their future, and businesses deserve certainty about the status of their workforce.

Brexit provides the potential for a renewed focus on what businesses and workers in the North East need to thrive and how to strengthen our important relationship with Europe.  We ask the government to engage with businesses and unions to ensure we get the right deal.

References

[1] HM Treasury, Number of regional jobs linked to EU exports, https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509499/Number_of_regional_jobs_linked_to_EU_exports.pdf p. 3

[2] Ibid

Details about the event

At the What are the regional priorities for trade policy post-Brexit?’ event on 22 February 2017, Newcastle, Dr Peter Holmes from the UK Trade Policy Observatory provided an economic analysis of the UK’s trade relations post-Brexit. He scoped out key issues from an economic perspective as well as a number of potential scenarios and the possible impact on employment, wages, sectors, growth for the North-East region and the car industry in particular. This was followed by a roundtable discussion with the CBI and TUC representatives and attendees.

Disclaimer:
The opinions expressed in this blog are those of the author alone and do not necessarily represent the opinions of the University of Sussex or UK Trade Policy Observatory. 

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