Friday, January 11, 2019

News: SCR "has a lot to lose from Brexit"

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Economic growth in the Sheffield city region (SCR) is set to be impacted by Brexit, from problems with exporting for the manufacturing sector to reduced levels of inward investment.

A report on the subject is set to be discussed by the SCR Local Enterprise Partnership (LEP) board next week. Private sector led LEPs are the Government's model to promote economic development and reflect the natural economic geography of the areas they serve.

There is a growing risk of the UK leaving the EU on March 29 without a deal and there is a consensus that the economic impact of a no-deal scenario for the UK economy (trading with the EU on WTO terms) would be significant and negative.

The Government's analysis shows that Yorkshire and the Humber will likely see its GVA and GDP fall on an increasing scale depending on how far the Withdrawal Agreement is from the current EU trade arrangement.

The paper picks out some potential impacts of Brexit on the SCR including the likelihood that manufacturing firms trading with the EU would see increased costs due to delays and tariffs. South Yorkshire's export market is heavily dependent on the EU with 57% of the value of all goods going to this market (the 8th highest county in England). The EU is the UK steel sector's biggest market.

Imports and supply chains would also be affected through increased tariffs and border checks.

A study by Oxford Economics commissioned by the SCR in 2017 said: "these high figures suggest that the area has a lot to lose from Brexit, which is potentially quite disruptive to the area's exporting firms."

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The paper also points to Sheffield Hallam research that estimates that manufacturing production output would be reduced by 5.5% and increasing to 19.5% under a no-deal scenario.

It adds: "The SCR economy remains dependent on manufacturing. There is a real fear therefore that the introduction of tariffs and border checks in trade with the EU will have a disproportionately large and damaging impact on manufacturing businesses in the SCR.

"Components as well as finished goods presently move freely back and forth across the border with the rest of the EU. Just-in-time delivery systems have often become the norm. The reliance of the motor industry on cross-border movements has been well publicised but similar arrangements apply to a wide range of other manufacturing industries."

The paper adds that there has been a "decline in investment by existing SCR companies and there is a strong likelihood that future investment could be curtailed." Businesses have delayed decisions to expand due to the uncertainty, as well as indigenous investment in R&D and workforce development being put on hold, the paper adds. The slowdown in applicants to the SCR's Business Investment Fund (BIF) is one example.

The LEP operates a team dedicated to attracting inward investment and the paper states that enquiries are lower than previous years and "clients that the SCR does have on-going projects with are generally taking longer with their decision making and a number have delayed projects to wait and see the outcome of Brexit."

Other impacts focus on EU workers and higher education whilst opportunities could be created for the local labour market and a weaker pound should help boost exports.

The LEP is also lobbying the Government on its plans for the new UK Shared Prosperity Fund which is set to replace structural funding which has previously been channelled into South Yorkshire by the EU for economic development projects.

In the short term, an online tool is set to be launched on the SCR Growth Hub that provides local businesses with a tailored report on the things they need to be thinking about for Brexit and directs them to resources to help them prepare. Workshops and events could also help.

A SCR economy breakfast event at the AESSEAL New York Stadium in Rotherham on January 17 will focus on Brexit, and it's impact on business.

SCR LEP website

Images: Liberty Speciality Steel

3 comments:

Anonymous,  January 11, 2019 at 3:37 PM  

Blah blah blah,WE VOTED LEAVES AND WERE LEAVING!👍

Anonymous,  January 12, 2019 at 9:15 AM  

Do you work in manufacturing?

Anonymous,  January 16, 2019 at 2:41 PM  

No I dont work in.manafacturing,but I am DEMOCRATIC,Should try it,its what our forefathers died for!

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