“The Midlands and the North of England are more exposed to Brexit than any other region in Europe”

The St George’s flag flies over Teesside. Image: Getty.

The very areas of the UK which voted Leave in June 2016 are likely to be the ones hardest hit by Brexit. Our research on the likely economic consequences of leaving the European Union on different regions and industries is consistent with the recently leaked government analysis which suggests that London will be one of the areas least hit in the event of a no-deal Brexit. The north-east of England, meanwhile, will be one of the worst affected.

An important element here is that these regions (and the sectors of the economy based there) have little representation in the Brexit negotiations and rarely figure in media discussions. When it comes to the potential impact of Brexit, the most prominent stories are those with underlying political or business interests. For example, the case for special treatment of particular industries after Brexit tends to revolve around financial services, automobile and aerospace firms.

On the one hand this is because these industries are widely understood as critical for the UK economy. But it’s worth noting that these industries also have strong lobbying power and access to government policymakers. In contrast, many other parts of the UK economy do not. Our analysis suggests that, in reality, it is many of the less high-profile sectors – and the regions where they are located – that could be the most exposed to Brexit.

We examined the extent to which British industries depend on trade with the EU. On the basis of an analysis of global trade patterns across 43 countries and 54 industries, we were able to calculate a Brexit risk-exposure index.

We did this for each UK sector under a “no deal” Brexit scenario in which much of UK trade faces severe disruptions and impediments. We also put together a “hyper-competitive” scenario in which UK industries can rapidly adapt and mitigate against the effects of losing single market access.

In our analysis, an industry’s exposure to Brexit is defined by the extent it is dependent on products or services that cross a UK-EU border at least once. We calculated exposure levels for different industries. They indicate how much the industry has to restructure its supply chains and employees to mitigate against the losses caused by reduced post-Brexit trade and movement with the EU. This gives us a picture of which industries are likely to be hit hardest by a no-deal Brexit and which ones will most likely remain virtually unaffected.

Deal or no deal

Across the UK, the results for a no-deal Brexit scenario show:

  • More than 2.5m jobs are directly at risk.
  • Almost £140bn of UK economic activity annually is directly at risk.
  • Many important manufacturing and primary industries are at risk, but so are many service industries – not just financial services.
  • Many of these services are not only exported directly to EU countries, but are also sold to UK manufacturing firms who then export to the EU.
  • Workers in the jobs at risk are on average slightly more productive than the average British worker – so Brexit is likely to exacerbate the UK’s productivity problems.

The findings show that, in 15 out of 54 industries, more than 20 per cent (and up to 36 per cent) of economic activity is at risk from Brexit. Industries include fisheries, chemicals and motor vehicle manufacturing.

GDP exposure to Brexit of European regions. Image: Chen et al (2018).

The industries facing the highest risks overall, and likely to be the hardest hit by a no-deal Brexit, are service industries such as professional, scientific, administrative and technical services. Others at high risk include the wholesale trades, legal and accounting services, retail trade, warehousing, land transport services, computer programming, and activities that support financial services. These are all industries which are dissipated across the wider economy and have very little structured lobbying power or media profiles.

Alternatively, in a “hyper-competitive scenario” – where UK industries can rapidly adjust to life outside the single market by sourcing parts in the UK that are currently sourced from the EU – our findings suggest that increases in UK employment and GDP could be about one-third of the losses in a no-deal scenario. So the risks for the UK would be much less in this scenario.

But current UK productivity figures suggest that most of the UK economy is nowhere near being hyper-competitive, so this case appears to be largely unrealistic.

Sector and region inequality

Our research also found that financial services is one of the least vulnerable sectors to Brexit with an exposure level of 8 per cent of its GDP being at risk. This is still significant, but it is low in comparison to many other sectors – largely because the financial services sector is already highly globalised and therefore displays a low dependence on EU markets.

Brexit vote map. Image: Chris Green.

Instead of financial services, greater emphasis should be placed on helping other, much more exposed sectors. Those that are likely to be the hardest hit by a no-deal Brexit are a range of other services industries. But these are parts of the economy which don’t lobby Westminster and rarely get the attention they need.

Our other analyses also show that it is the Midlands and the North of England which are by far the most vulnerable. They are more exposed to Brexit than any other region in Europe. The reason is that the Midlands and north of England are much more dependent on EU markets for their trade than London, the South East or Scotland.

As such, in the UK-EU negotiations there is no real representation from either the most exposed sectors or the most exposed regions. Instead, the focus of government discussions tends to be on those sectors and regions which are actually the least exposed parts of the UK economy. This means that whatever is finally negotiated is unlikely to alleviate the effects of Brexit on the vast majority of the UK.

 


Raquel Ortega-Argilés, Chair in Regional Economic Development, University of Birmingham and Philip McCann, Chair in Urban and Regional Economics, University of Sheffield.

The ConversationThis article was published in conjunction with the UK in a Changing Europe initiative. Wen Chen, Bart Los, Mark Thissen and Frank Van Oort were co-investigators on the research mentioned.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

What’s killing northerners?

The Angel of the North. Image: Getty.

There is a stark disparity in wealth and health between people in the north and south of England, commonly referred to as England’s “north-south divide”. The causes of this inequality are complex; it’s influenced by the environment, jobs, migration and lifestyle factors – as well as the long-term political power imbalances, which have concentrated resources and investment in the south, especially in and around London.

Life expectancy is also lower in the north, mainly because the region is more deprived. But new analysis of national mortality data highlights a shockingly large mortality gap between young adults, aged 25 to 44, living in the north and south of England. This gap first emerged in the late 1990s, and seems to have been growing ever since.

In 1995, there were 2% more deaths among northerners aged 25 to 34 than southerners (in other words, 2% “excess mortality”). But by 2015, northerners in this age group were 29% more likely to die than their southern counterparts. Likewise, in the 35 to 44 age group, there was 3% difference in mortality between northerners and southerners in 1995. But by 2015, there were 49% more deaths among northerners than southerners in this age group.

Excess mortality in the north compared with south of England by age groups, from 1965 to 2015. Follow the lines to see that people born around 1980 are the ones most affected around 2015.

While mortality increased among northerners aged 25 to 34, and plateaued among 35 to 44-year-olds, southern mortality mainly declined across both age groups. Overall, between 2014 and 2016, northerners aged 25 to 44 were 41% more likely to die than southerners in the same age group. In real terms, this means that between 2014 and 2016, 1,881 more women and 3,530 more men aged between 25 and 44 years died in the north, than in the south.

What’s killing northerners?

To understand what’s driving this mortality gap among young adults, our team of researchers looked at the causes of death from 2014 to 2016, and sorted them into eight groups: accidents, alcohol related, cardiovascular related (heart conditions, diabetes, obesity and so on), suicide, drug related, breast cancer, other cancers and other causes.

Controlling for the age and sex of the population in the north and the south, we found that it was mostly the deaths of northern men contributing to the difference in mortality – and these deaths were caused mainly by cardiovascular conditions, alcohol and drug misuse. Accidents (for men) and cancer (for women) also played important roles.

From 2014 to 2016, northerners were 47% more likely to die for cardiovascular reasons, 109% for alcohol misuse and 60% for drug misuse, across both men and women aged 25 to 44 years old. Although the national rate of death from cardiovascular reasons has dropped since 1981, the longstanding gap between north and south remains.

Death and deprivation

The gap in life expectancy between north and south is usually put down to socioeconomic deprivation. We considered further data for 2016, to find out if this held true for deaths among young people. We found that, while two thirds of the gap were explained by the fact that people lived in deprived areas, the remaining one third could be caused by some unmeasured form of deprivation, or by differences in culture, infrastructure, migration or extreme weather.

Mortality for people aged 25 to 44 years in 2016, at small area geographical level for the whole of England.

Northern men faced a higher risk of dying young than northern women – partly because overall mortality rates are higher for men than for women, pretty much at every age, but also because men tend to be more susceptible to socioeconomic pressures. Although anachronistic, the expectation to have a job and be able to sustain a family weighs more on men. Accidents, alcohol misuse, drug misuse and suicide are all strongly associated with low socioeconomic status.

Suicide risk is twice as high among the most deprived men, compared to the most affluent. Suicide risk has also been associated with unemployment, and substantial increases in suicide have been observed during periods of recession – especially among men. Further evidence tells us that unskilled men between ages 25 and 39 are between ten and 20 times more likely to die from alcohol-related causes, compared to professionals.

Alcohol underpins the steep increase in liver cirrhosis deaths in Britain from the 1990s – which is when the north-south divide in mortality between people aged 25 to 44 also started to emerge. Previous research has shown that men in this age group, who live in the most deprived areas, are five times more likely to die from alcohol-related diseases than those in the most affluent areas. For women in deprived areas, the risk is four times greater.


It’s also widely known that mortality rates for cancer are higher in more deprived areas, and people have worse survival rates in places where smoking and alcohol abuse is more prevalent. Heroin and crack cocaine addiction and deaths from drug overdoses are also strongly associated with deprivation.

The greater number of deaths from accidents in the north should be considered in the context of transport infrastructure investment, which is heavily skewed towards the south – especially London, which enjoys the lowest mortality in the country. What’s more, if reliable and affordable public transport is not available, people will drive more and expose themselves to higher risk of an accident.

Deaths for young adults in the north of England have been increasing compared to those in the south since the late 1990s, creating new health divides between England’s regions. It seems that persistent social, economic and health inequalities are responsible for a growing trend of psychological distress, despair and risk taking among young northerners. Without major changes, the extreme concentration of power, wealth and opportunity in the south will continue to damage people’s health, and worsen the north-south divide.

The Conversation

Evangelos Kontopantelis, Professor in Data Science and Health Services Research, University of Manchester

This article is republished from The Conversation under a Creative Commons license. Read the original article.