Disunited Kingdom: Why ‘Brexit’ endangers Britain’s poorer regions

Britain is home to some of the richest and poorest regions in Western Europe, and the gap between them is widening. A British exit from the EU risks making the country's regional inequality even worse, according to a new Centre for European Reform analysis, ‘Disunited Kingdom: Why ‘Brexit’ endangers Britain’s poorer regions’.

The report shows that poorer regions would be more affected by ‘Brexit’ than richer ones, since their economies are more dependent on exports to the EU. If the UK withdrew and traded with the EU under the WTO’s rules, the EU would apply tariffs to British goods imports. This would do most harm to the poorest regions’ economies, because they are more reliant on manufacturing.

• The North East of England is most exposed to such tariffs, largely because of the Nissan car factory in Sunderland and its suppliers. Goods exports to the EU make up 11 per cent of the region’s output (see chart). It is also one of Britain’s poorest regions, as measured by output per head, as well as being consistently eurosceptic in opinion polls.
• By contrast, London, the wealthiest UK region, would be largely unaffected by EU tariffs on goods, as manufacturing makes up a small proportion of its economy.

Chart: Poorer regions have most to lose from Brexit


Source: Centre for European Reform analysis of Office of National Statistics, regional trade statistics and regional gross value added data

Commenting, the report’s author John Springford said:

“Many eurosceptics claim that it would be easy to sign a free trade agreement with the EU, to stop tariffs being applied to British goods. In fact, the EU would have the upper hand in trade negotiations. The EU buys 45 per cent of Britain’s exports, while the UK only buys 7 per cent of the EU’s, so the EU would be able to dictate terms."
 

"Any free trade agreement would require Britain to accept the free movement of workers and most of the EU’s rules – just as Switzerland must. Politically, this would be worse than EU membership, since Britain would not be able to limit immigration and would have even less control over EU regulations. If Britain balked at such a deal and traded under World Trade Organisation rules, its poorer regions would lose out most.”

John Springford is a senior research fellow at the Centre for European Reform.

This analysis follows the CER commission on the economic consequences of leaving the EU, whose final report can be downloaded here.


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Written by John Springford

sourche: http://www.cer.org.uk/publications/archive/policy-brief/2015/disunited-kingdom-why-%E2%80%98brexit%E2%80%99-endangers-britain%E2%80%99s-poorer-reg?utm_source=All+website+signups+as+of+21+March+2014&utm_campaign=5cee072066-Disunited_Kingdom&utm_medium=email&utm_term=0_c3be79867d-5cee072066-301763949